Leafbuyer Technologies Inc (OTCMKTS:LBUY) has certainly fallen from grace of late. The stock charged from a buck to over $3.50/share in just about 2 months this Summer, but that action has been reversing rapidly over the past couple weeks. Some poor financial data in its latest 10-KT helps to explain the losses, but a recent press release out of the company does a fine job of demonstrating the overall sense of desperation going on here perhaps even better.
The nature of what a company does and doesn’t wish to express in a press release is often one of the most important “tells”. The best stocks generally only release announcements when they have something of critical importance that has a definite impact on future growth potential. The worst stocks do a press release nearly every day, desperately, and even pathetically, trying to drum up excitement for shares on the least relevant turn of events. In this case, we would categorize LBUY’s most recent release as a candidate for this second classification. We will get to it in a moment. But first, for those who aren’t familiar with the name, here is a general overview.
Leafbuyer Technologies Inc (OTCMKTS:LBUY) trumpets itself as a technology-based cannabis marketing company based in Greenwood Village, CO. The company’s website, leafbuyer.com is the most comprehensive online source for cannabis deals and specials,
LBUY connects consumers with dispensaries. Leafbuyer works alongside businesses to showcase their unique products and build a network of loyal patrons. Leafbuyer’s national network of cannabis deals and information reaches millions of consumers monthly.
LBUY is the official cannabis deals platform of thecannabist.co (owned by the Denver Post) and westword.com. The company also operates one of the largest cannabis-based employment boards in the industry and has partnered with large cannabis content sites that are included in their distribution network.
According to company materials, “The most comprehensive online source for cannabis deals and specials, Leafbuyer.com connects consumers with dispensaries. Leafbuyer works alongside businesses to showcase their unique products and build a network of loyal patrons. Leafbuyer’s national network of cannabis deals and information reaches millions of consumers monthly. Leafbuyer is the official marijuana deals platform of thecannabist.co (owned by the Denver Post) and westword.com.”
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As noted above, LBUY shares have been sliding fast in recent action. The slide began a few weeks ago. In response to the action, the company recently put out a whole press release to let the world know that it has been selected as one of the 150 most important cannabis companies according to an obscure website.
According to the company’s press release, “the Cannabis Business Executive (CBE) has named Leafbuyer on its Ancillary Business List 2017, based on annual revenue and impact on the industry as a whole. Given the federal laws surrounding marijuana, cannabis businesses in the United States face unique advertising challenges. Leafbuyer allows dispensaries to reach and attract potential customers through their unique technology platform.”
Leafbuyer Technologies CEO Kurt Rossner said, “Our clients are seeking effective, professional marketing solutions to reach and retain customers, and Leafbuyer aims to fill this market need. We are thrilled to be recognized by CBE as a leader in the ancillary cannabis market.”
As noted, this is hardly an important factor in helping investors understand the company’s growth potential or financial reality. It looks far more like a company trying to get something out there before slipping into the mix some less than good news.
In this case, the bad news was the company’s 10-KT, in which it was revealed that, during the best growth period in the company’s history, LBUY saw net losses rise on a y/y basis from about $60K to about $341K — a 467% jump in the wrong direction.
Shares dove in response to the news, dropping about 20% in the past few days. However, LBUY has a track record that includes a number of dramatic bounces. What’s more, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed above 100% above the average volume levels in play in this stock over the longer term.
Traders should note this as important with a float in play that’s limited — under 12M shares. That type of float can certainly help the volatility of a bounce if the stock should find support in coming days.
At this time, carrying a capital value in the market of $66.8M, LBUY has a store ($224K) of cash on the books, which compares with virtually no total current liabilities. LBUY is pulling in trailing 12-month revenues of $232K. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 7616.8%. As more color becomes clear on the name, we will review the situation and update our take.