Zuanic & Associates have conducted a comprehensive equity research report, offering a measured outlook on WM Technology MAPS, a prominent player in the cannabis industry. The report highlights the company’s distinctive market position and future prospects.
Assessing Market Position and Valuation
Pablo Zuanic, Z&A’s senior analyst, expressed a neutral rating for WM Technology, stating, “We initiate coverage of WM Technology with a Neutral rating. Trading at 0.6x sales (vs. 4.5x for comparable e-commerce/SaaS stocks) the stock valuation does not properly reflect MAPS’ unique franchise as the leading online cannabis consumer marketplace.”
Despite being undervalued, WM Technology’s dominance in key markets and a market cap of $142 million underscore its potential within the cannabis sector.
- For the calendar year 2024, WM Technology (MAPS) is trading at 0.5x sales and 4.2x EBITDA. For 2025, these figures are projected to be even lower at 0.4x sales and 2x EBITDA.
- In comparison, Vertical SaaS stocks are trading at 5x sales and 17x EBITDA, marketplace stocks at 3.3x sales and 11x EBITDA, and e-commerce enablement stocks at 5x sales and 46x EBITDA.
- Zuanic & Associates calculated MAPS’s enterprise value (EV) at $121 million, considering the latest share count and the current share price of $0.88, resulting in a market cap of $142 million.
- For calculating EV, they took into account net cash of $28 million and leased net of right-of-use assets of $7 million, excluding the minority interest of $95 million as reflected in the non-controlling share classes.
- With the current EV of $121 million, MAPS trades at 0.6x current sales (based on the annualized 3Q23) and 5x current EBITDA.
Exploring Growth Prospects And Challenges
The company aims for growth beyond its primary markets (CA, CO, MI, OK) with US cannabis market expansion. However, the report acknowledges hurdles in these markets and near-term growth limitations, evident from fluctuating sales and EBITDA figures.
Zuanic noted, “Overall US cannabis market growth should be a key driver of company growth (although we note company revenues have lagged the US market and its home market of CA since 3Q22).”
Evaluating Strategic Shifts And Revenue Streams
The report highlights that “MAPS has narrowed its focus away from a “one-stop” solution provider.”
Zuanic explains that MAP’S revenue growth strategies include enhancing existing customer bases and expanding into new accounts, despite potential risks from recent pricing structure changes.
Painting The Bull And Bear Scenarios
The report concludes with possible future scenarios. The bullish forecast envisions MAPS leveraging its market position for substantial growth, while the bearish outlook suggests potential struggles due to market saturation and strategic risks.
Zuanic described a potential bullish scenario for MAPS: “From a technical perspective, the stock could move up if cannabis stocks surge on rescheduling news… From a fundamental perspective acceleration in the US cannabis market growth… should all bode well for MAPS.”
“There is a risk the backlash in CA worsens and that the company loses penetration while realizing little increased revenue per paying client there and that MAPS fails in expanding penetration in new states (and or CO and MI),” Zuanic added on the bear case.
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