Today on the cannabis penny stocks market, one of the favorite penny stocks is seeing red. Namaste (TSXV:N) stock has dropped despite experiencing a pop yesterday off the back of its revolutionary first-of-its-kind medical license.
This unique medical cannabis license means Namaste can sell pre-tested and pre-packaged medical marijuana products. The license removes the need for the firm to run in-house testing and re-packaging of produce. This should mean an increase in revenue margins by reducing operational costs.
Cannabis Penny Stocks: Namaste is in the Red
The market reacted favorably to this news, but today, at the time of writing, N stock is down 8.02% with each share valued at $3.44. Shares reached $3.93 at their height yesterday.
So what is going on with these cannabis penny stocks today? Has something occurred?
Could Shopify (NYSE:SHOP) be the catalyst?
Shopify and Cannabis?
It was announced recently that Ontario and British Columbia chose Shopify as their partner to facilitate online and in-store sales of recreational cannabis. This decision has caused a quandary for Namaste as it will now have a very formidable competitor move into its space.
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Namaste is definitely more niched to serve the cannabis sector than Shopify is currently—Shopify excels predominantly in fashion and cosmetics. But is there really enough here to concern investors? I think so. And here’s why:
Both provinces are going to experience a surge in recreational cannabis demand when legalization takes off next month. The penny stocks company has lost out on a massive market. Also, Shopify has signed deals with major cannabis companies such as Canopy Growth Corp. (TSX:WEED), Aurora Cannabis (TSX:ACB), and The Green Organic Dutchman (TSX:TGOD), to sell their cannabis produce on its website. These deals will further cement Shopify’s place in this sector.
When we look at the math, it is estimated that these brands will produce and sell around 40% of the entire cannabis market supply. That leaves big gaps in the market that Namaste won’t get a piece of.
So, will this cannabis penny stocks company lose its hold on the cannabis e-commerce sector? What do you think? Worthy of worry or is there more than enough pie to go around?
Featured Image: DepositPhotos/© depositedhar
