In a comprehensive equity research report, Zuanic & Associates present an objective analysis of WM Technology MAPS, a prominent player in the cannabis sector, shedding light on its distinct market position and growth prospects.
Market Position And Valuation
Pablo Zuanic, senior analyst at Z&A, stated, “We initiate coverage of WM Technology with a Neutral rating. Trading at 0.6x sales (compared to 4.5x for similar e-commerce/SaaS stocks), the stock valuation does not adequately reflect MAPS’ leading position as the premier online cannabis consumer marketplace.”
Despite being undervalued, its dominance in key markets and a market cap of $142 million underscore its potential in the cannabis sector.
- WM Technology (MAPS) is presently trading at 0.5x sales and 4.2x EBITDA for the calendar year 2024. These figures are projected to decrease further to 0.4x sales and 2x EBITDA in 2025.
- 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 computed 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.
- To calculate EV, they incorporated 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.
Growth Prospects And Challenges
The company aims for growth beyond its primary markets (CA, CO, MI, OK) with an expansion into the US cannabis market. However, the report acknowledges hurdles in these markets and short-term growth limitations. Fiscal reports display 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).”
Strategic Shifts And Revenue Streams
As per the report, “MAPS has narrowed its focus away from a “one-stop” solution provider.”
Zuanic explains that MAP’S revenue growth strategies focus on strengthening existing customer bases and expanding into new accounts, despite risks from recent pricing structure changes.
Bull And Bear Scenarios
The report concludes with potential future scenarios. The bull case envisions MAPS leveraging its market position for substantial growth, while the bear case suggests potential struggles due to market saturation and strategic risks.
Zuanic outlined 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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