WM Technology's MAPS revenue decreased 4.5% year-over-year and sequentially in Q1 2024.
Average monthly paying clients decreased 1.5% sequentially to 4,937, and average monthly revenue per client decreased 1.5% to $2,997. Nevertheless, Pablo Zuanic, senior analyst at Zuanic & Associates, found bullish factors for cannabis tech stocks in his latest report.
Q1 2024: Highlights
EBITDA margin continued to exceed 20% and reached 21.6% in the first quarter of 2024 due to lower sales and marketing expenses and improved cost efficiency. California accounted for about 55% of sales, and Colorado, Michigan and Oklahoma accounted for about 30%. The company had negative EBITDA of $10 million in the first quarter of 2024, compared to negative $9 million for all of 2022. As of March 2024, MAPS had $36 million in cash with no financial debt, resulting in an increase in EBITDA of $1.3 million sequentially. cash. A decrease in accounts receivable from $11.1 million to $7.9 million contributed to this positive cash flow. Free cash flow for the first quarter of 2024 was $2.9 million, and the company generated free cash flow of $11 million for all of 2023.
outlook
Zuanic said MAPS management did not provide guidance for fiscal 2024, but expects second-quarter 2024 sales to be stable, with EBITDA of $9 million to $11 million due to increased marketing spend. It is expected that the amount will decrease to about $7 million. Meanwhile, the recent legalization of recreational cannabis in Ohio is expected to drive growth in the second half of 2024.
Ratings and market performance
Zuanic said in the report that WM Technology's 2024 revenue is 1.3x and EBITDA is 8x.
In contrast, vertical SaaS stocks are valued at 6.7x sales and 19x EBITDA, marketplace stocks are valued at 2.5x sales and 10x EBITDA, and e-commerce enablement stocks are valued at 3.7x sales. , 26x EBITDA. Zuanic noted that with a market capitalization of $156 million and an enterprise value of $243 million, MAPS appears to be undervalued compared to its peers in the technology sector.
stock price performance
Over the past three months, the NASDAQ has risen 2%, while MAPS has fallen 14%. However, over the past 30 days, MAPS has risen 8% while the NASDAQ has fallen 6%.
Despite current valuation and growth potential, the rating remains unchanged due to lackluster sales trends and limited penetration outside core states. Zuanic rates MAPS as “neutral.” If MAPS matches its growth with the 50% expansion the cannabis industry expects over the next three years, the stock could rise significantly.
Related article: European cannabis companies race to Nasdaq market: $1 billion tax cut on the horizon
bull incident
Zuanich noted that from a technical perspective, cannabis stocks have a higher correlation to the MSOS ETF than the Nasdaq, so if cannabis stocks spike on news of the schedule change, the stock could rise.
“Equities could benefit from a revaluation of tech stocks, as EV/Sales for comparable tech stocks has fallen from low teens three years ago to 4-5x now. Fundamentally, any accelerated growth in the U.S. cannabis market should bode well for MAPS; the company also has room to expand its penetration in several states,” Zuanich wrote. “If the company's sales reach $500 million by 2026 at 4x EV/Sales, the stock could be worth $13 by December 2025, up from $0.81 today. ”
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