LP Stocks Aren’t Worth The Price

Article by Caleb McMillan, Cannabis Life Network


Investors have pushed up Canopy’s stock price more than 850 per cent because they expect Canopy to be the Wal-Mart of cannabis. But they’ve also pushed up the stock because it’s considered a safe haven in a sea of chaos. Virtually every stock has gone up in the last ten years.

Investors trade their hard-earned savings for shares of a (hopefully) successful, well-managed business.

That’s what stocks represent – ownership interests in businesses. So investors are ultimately buying a share of a company’s net assets, profits, and free cash flow (i.e. the money available to pay out to shareholders).

But is that what the current stock market represents? Is that what Canopy’s $5.5 billion market cap represents? A well-managed business?

In 2006, Exxon Mobil reported $365 billion in revenue, profit of nearly $40 billion and free cash flow of $33.8 billion. At the time, the company had $6.6 billion in debt.

Ten years later, Exxon’s full-year 2016 revenue was $226 billion, net income was $7.8 billion, free cash flow was $5.9 billion and the company had a staggering debt of $28.9 billion.

Compared to its performance in 2006, Exxon’s 2016 revenue dropped nearly 40%, due to the decline in oil prices. Profits and free cash flow collapsed and debt skyrocketed.

Read full article here.

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