This is a Forbes article?
The clickbait engine and financial media cesspool Forbes has discovered a shocking new revelation, ‘pot stocks will never recover.’ This new article written by Stephen McBride of RiskHedge is probably the worst article I have seen in 2019. It makes the claim that cannabis stocks are completely fucked and can never come back. The points McBride uses to back up his apocalyptic viewpoint are beyond perplexing. His idea is supported by useless metaphors comparing cannabis with apples and broccoli, more on that below.
Let’s go over this Forbes theory with some highlights from the article.
“I Won’t Put a Penny into Marijuana Stocks”
Right off the bat we learn that McBridge has not put a penny into cannabis stocks, and by the sounds of it would not go back in time to buy Canopy (CGC) at $2.
I could only imagine his clients calling him endlessly about cannabis stocks, and each time he said ‘no’. Now that the sector is facing a correction he can come out and brag about he was right, pointing out his inability to know how to sell into profits.
“Internet marketers have promoted the heck out of this exciting new industry. You’ve probably seen ads promising to make you a “pot stock millionaire”.
OK Forbes, that’s exactly how your company earns revenue, your site is caked up with Native Ads. Forbes has also written several weed stock pump articles like ‘Namaste Will Go To $7″.
To make things even worse, the writer of this piece sells this product on McBride’s company’s website:
He then ends his piece by saying : “Get my report “The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money”. These stocks will hand you 100% gains as they disrupt whole industries. Get your free copy here.”
** We talk about companies on this site, but have never set a price target, or told people they can 2x or 10x their money, we leave that to Forbes & The Motley Fool
The worst metaphors
Now we get into the metaphors, these make absolutely no sense, but are good for a laugh.
“You see, now that it’s becoming legal, there’s nothing special about marijuana. Like corn or wheat, it’s a crop. Selling marijuana was lucrative because it was illegal.”
So, in the writers opinion – people will now stop consuming cannabis products because they are legal. While I understand some rebellious teens might not think it’s as cool anymore to smoke weed, the amount of new users (namely boomers) who are getting into products like CBD greatly offset this potential phenomenon.
Visual Capitalist points out the value of cannabis vs. something like wheat. A sq/km of cannabis is 85,007% more valuable than a sq/km of wheat. But, according to Forbes cannabis is just like any other crop on the market.
This is the equivalent of comparing gold and dirt by saying they are equal chiefly because they are both found in the ground.
“To grow it and sell it, you risked getting locked in jail… or getting beat up by rival drug dealers. Most people won’t break the law. For decades, only people who were okay operating as criminals went into the marijuana business.”
I have no idea what this has to do with the legal cannabis industry, or cannabis stocks, but, hot take.
This next bit is baffling.
“And although only 11 states have legalized marijuana so far, more than 5,000 marijuana stores have opened up shop. Care to guess how many Walmart (WMT) stores are in the US? About 4,750. Do you see 5,000 specialty broccoli stores? Or 5,000 carrot stores? No, vegetables sit on grocery shelves and sell for $0.99. Farmers and grocers are lucky to squeeze out a penny or two of profit.”
Ok, there’s a lot of stupid in this one, let’s break this down line by line. First off, who starts a sentence with ‘and’?
Second, Walmart has closed stores because more and more people are shopping online, namely on platforms like Shopify and Amazon. It’s not Walmart that is suffering, it’s the business model of brick & morter storefronts.
Look at that awful Walmart chart, they’ve really been hurting as their stores have closed.
With Shopify controlling most of the e-com of the legal sector, others have setup grey market online dispensaries that are making shit tons of money. The amount of online potential for selling cannabis products has not been unlocked yet, online sales will skyrocket once regulations loosen up on a government level, as well as on the advertising platforms themselves.
As far there being no carrot or broccoli stores – um, there are literally hundreds of places in each city in the developed world where one can buy vegetables. Referring back to the Visual Capitalist chart – if broccoli was as valuable of a commodity as cannabis there probably would be broccoli stores. Again, the author doesn’t seem to have the comprehension to understand value.
“Marijuana is a commodity. It’s all roughly the same, no matter where or how it’s grown.”
Just like how all wine is the same no matter whether it’s from Tuscany, Bordeaux, California or Portugal – people generally don’t care where the grapes are from, as long as they are grapes.
“They’ll say marijuana has dozens of uses other than getting you high. I’m sure all this is true. But it’s mostly irrelevant for investors.”
Here’s an article from none other than Forbes stating the CBD industry could reach $20B by 2024. According to McBridge – $20B is irrelevant and people will not make money from that.