Companies such as Isodiol and Namaste expanded through acquisitions. You know from reading CannaInvestor Magazine each month that a premium is typically paid by the Acquiror and any share/stock consideration creates dilution. Dilution of course is an increase in the supply of shares and the share price needs to find a new equilibrium before settling and starting a new trendline. Ryan Hum, our resident expert in Technical Analysis, explains this:
Finding a bottom or a reversal on companies that have been in a downtrend can be rather jarring, but if you know what to look for the chore really becomes a reward when you can nail them at the bottom and ride the prices back up. Take $ISOL.c for example. It is currently in a downtrend and has lost its 200-day moving average. This moving average will likely be near-term resistance, but if it can bust pass this point and other indicators such as the COPP turn positive then we would be more inclined to take or add to our positions. By reading Canna-Investor Magazine each month you not only get insight into the technical world but also the fundamentals of what is going on and would know that a premium is typically paid by the Acquiror and will cause stock dilution, which can temporarily create a negative sentiment until shareholders are shown that the acquisition was indeed beneficial and the prices reflect the efforts of the company. As always it is best to look at a company from multiple angles, understanding both the fundamentals and technicals before making your decisions.
In early articles in our USA edition, I encouraged you to read an article written by Chris Parry titled “How Short Sellers are Killing Companies – and the Market”. Although dated, its hypothesis remains as valid today as it was when written.
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