The thesis here is simple: HempAmericana Inc (OTCMKTS:HMPQ) represents a potentially powerful speculative opportunity as the bottom comes into place on a long time horizon in the cannabis, hemp, and CBD sector.
The evidence for this is both company-specific and macro-oriented.
Top Down
Beginning with the macro side, there are three key reasons to believe we are presently sitting on the other side of the final bottom following the devastating and protracted 18-month bear market that has dominated the cannabis-related space.
First, cannabis and its derivatives represent a product market that has become seasonal in nature, with strength skewed during the part of the annual cycle when outdoor growers are planting and raising new crops. The market is made of outdoor, greenhouse, and indoor growers. The late spring, summer, and early fall define a stretch when the outdoor growers are not coming to market. That means the supply for immediate sale is reduced relative to post-harvest.
Second, the coronavirus epidemic has effectively shut down the supply chain and distribution infrastructure. But cannabis pant derivatives are a staple for their customer base, and there’s no physical or human law that says we can’t find a way to distribute during the virus lockdown.
Third, the coronavirus crash, we believe, acted as a final capitulatory leg in the sector, washing out all remaining weak hands, and bringing many names into focus for distressed asset accumulation – the hallmark for a large scale sector-specific bear market bottom.
That sets in motion a macro tailwind for the entire space, and especially for CBD stocks with qualitative growth catalysts on the near horizon and as-yet unmonetized market-leading fixed cost investments set to start paying off. HempAmericana Inc (OTCMKTS:HMPQ) precisely fits that description.
Bottom Up
On the micro side, HMPQ is moving in the right direction. That much should be clear based on the company’s recent announcements. The tone has changed. Gone are the fantastic proclamations of unrealistic leaps to come. The last few releases have been substantive, plausible, and grounded, and aimed at solid accretive objectives.
The most recent release is very much on target for what the company’s shareholders should want to see: a multi-pronged set of new initiatives to expand marketing, distribution, and customer service. After all, the company already has a market-leading extraction facility with state-of-the-art equipment and a stacked inventory. What it lacks is marketing, distribution, and a strong relationship with its target market.
Salvador Rosillo, CEO of HempAmericana, summarized it well: “After confronting a series of obstacles and falling behind our outlined schedule, we have mapped out a path to drive improved performance in the months ahead. We believe we will be able to mobilize multiple factors to boost our footprint in terms of potential customers we can reach, distribute to, and retain over time.”
Note that this follows the company’s prior announcement that it has its payment platform operational now following the launch of its new fully-functional ecommerce site.
This next phase is going to apparently leverage the company’s relationship with Alibaba (BABA), the China-based ecommerce and B2B supply chain giant.
According to the release, the Alibaba onboarding process is underway and we will hear about when that process has reached an official result in the very near future. This should help on the distribution side as the company creates bulk distribution to drive volume sales likely on its white label side.
That will be matched with a new customer service agenda, a list-based marketing plan, and a massive affiliate marketing process fueled by hundreds of new relevant web domains pointing to the HempAmericana ecommerce site which are already reportedly in place. The company notes that it has already seen a jump in site traffic. The process has started.
