The Motley Fool

The Kanabo share price is down almost 40% since listing. Here’s what I’d do now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Cannabis leaves of a plant on a dark background
Image source: Getty Images

With regulation of the cannabis sector increasingly being relaxed around the world, including in the UK, companies in the segment may be poised for great growth. Israel-based Kanabo Group (LSE: KNB) recently became the first such to list on the London Stock Exchange’s main market. The Kanabo share price opened to a well-received debut. 

But almost two months later, its share price was down by 40% at the last close. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Kanabo makes progress

I am not inclined to read much meaning into this, however. There does not seem to be much to explain the drop. In fact, going by the company’s latest update, it is clear that it has in fact made some forward strides. These are aimed at strengthening both production and distribution of its products. 

For production, it has tied up with Poland-based PharmaCann Polska. The company, which has both a cannabis cultivation and extraction facility, will produce Kanabo’s medical formula based on its protocols. It will also supply the cartridges required for its proprietary device VapePod. The device has the advantage of allowing metered doses of medical cannabis.

The company has also signed an agreement with Astral Health for distribution of its medical cannabis formula in the UK. 

Potential for sales expansion

I am particularly looking forward to Kanabo’s progress in the distribution of its products. It has so far run pilots for its products in two of its target markets – the UK and Germany. Its annual revenues are small from these, which I think essentially makes it pre-revenue. 

But, even the data for these years shows progress until 2019. It did slow down in 2020, though, because of the pandemic. As it expands its product distribution further, there should be more sales revenue for Kanabo. I think this can suggest how the company is developing.

Kanabo also has a presence in the wellness segment, which is somewhat separate from medical marijuana. The wellness segment includes products like CBD oils and teas that are available over the counter. 

With retailers now open in the UK again, there could be some pickup in these products too, though they are available online as well. The return of consumers to shops, greater acceptance of cannabis-based products for relaxation and anxiety relief and a likelihood of greater consumer spending post lockdown, could be positive for Kanabo. 

Is the Kanabo share price attractive?

The catch here of course is that it is early days for the company. How the Kanabo share price evolves over time will depend on its progress in growing its market. It will also depend on the regulatory environment, which has not always been positive for similar products. 

All things considered, I am cautiously optimistic on the medical cannabis sector. And going by its growth in markets like the US and Canada, I think this could be the next big thing. I will assess it for a bit longer before taking a plunge, however. Never mind the Kanabo share price fall. 

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.