Investors are cheering on Hydrofarm (NASDAQ:HYFM) as the company promises a green future. In facts, as the Hydrofarm IPO gains traction, HYFM stock is up nearly 145%. So what exactly is Hydrofarm? And what else do you need to know about this skyrocketing business?
To start, what is Hydrofarm? Importantly, the company is adjacent to the marijuana market. This is because it specializes in hydroponics equipment. For those unfamiliar, hydroponics refers to the process of growing a plant without soil. In other words, Hydrofarm helps support all of the marijuana growhouses that are necessary to support growing legal demand.
With that in mind, here are 13 things to know about HYFM stock and the Hydrofarm IPO:
- Hydrofarm Holdings started trading on the Nasdaq Exchange under the ticker HYFM.
- The company offered 8.7 million shares at a price of $20.
- Additionally, the company has granted its underwriters a 30-day option to purchase a further 1.3 million shares.
- Importantly, Hydrofarm has massively exceeded its IPO price.
- In fact, trading began this morning at $46 per share.
- Investors should note that the offering will close Dec. 14, 2020.
- JPMorgan Chase and Stifel were the lead book-running managers for the IPO.
- Clearly, the role of Hydrofarm in the hydroponics market is behind the IPO hype.
- This is because 70% of Hydrofarm equipment end users are part of the marijuana industry.
- Additionally, the 43-year old company is not a direct cannabis play.
- Investors likely appreciate this separation, especially as it allows Hydrofarm to have a more traditional debut on the public markets.
- We saw a similar rally this morning in Silver Spike (NASDAQ:SSPK) after the blank-check company announced it was taking Weedmaps public.
- There are also several political catalysts boosting HYFM stock today.
Why HYFM Stock and the Hydrofarm IPO Look Hot
So why does this all really matter? And what is the long-term interest in HYFM stock?
Essentially, investors are deciding that Hydrofarm exists in the exact right spot in the cannabis market. This makes sense as to how the company raised more than $170 million, after raising its IPO expectations. And, it also makes sense given a number of upcoming political events.
To start, President-elect Joe Biden has promised to decriminalize cannabis at the federal level. The U.S. House of Representatives recently took a step in the right direction, voting to pass landmark legislation. Although it is unlikely the Marijuana Opportunity Reinvestment and Expungement Act will pass the Republican-controlled Senate, it still shows how public sentiment is changing. What do I mean? Even without sweeping federal legislation, many states have taken measures to legalize or decriminalize cannabis use. That bodes well for the industry, and especially for the plant-free companies.
As we have seen this year with GrowGeneration (NASDAQ:GRWG), there is interest in this marijuana-adjacent market. Today, investors are diving into HYFM stock for that reason.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.
