If you look hard enough, you can actually find some very interesting special purpose acquisition company (SPAC) stocks that aren’t well known yet. One example is Silver Spike Acquisition (NASDAQ:SSPK), which struck a merger deal with WM Holding Company. As a prospective SSPK stock trader, you’ll definitely want to know what these companies are all about.
Right now, I’ll offer you a little tease by saying that WM Holding Company operates within the broader cannabis sector. That fact might scare off some cautious investors.
However, WM Holding Company isn’t a marijuana cultivator like some of the more famous companies in the sector. Therefore, you won’t have to worry about investing in a company that actually touches the plant.
Perhaps a hands-off approach to cannabis industry investing might appeal to you. If so, then let’s take a deep dive into the ins and outs of SSPK stock.
SSPK Stock at a Glance
It’s normal for pre-deal SPAC stocks to hover near the $10 level for a while as the investing community waits to find out which company the SPAC intends to merge with.
Thus, it shouldn’t be too surprising that SSPK stock stayed close to $10 throughout most of 2020. It wasn’t until December that the stock made a big move to the upside.
Amazingly, SSPK stock surged as much as 23% in pre-market trading as the merger deal with WM Holding Company was announced.
That took place on Dec. 10 as SSPK stock hurtled to $14. By Jan. 7, the share price was above $17. And at the close of the market session on Jan. 15, SSPK shares settled at $18 and change.
Indirect Entry Into the Cannabis Universe
Without further ado, let’s get into the nitty gritty of WM Holding Company. Founded in 2008, this company bills itself as “the leading technology and software infrastructure provider to the cannabis industry.”
In other words, it’s basically a cannabis technology platform. The company operates a California-based online cannabis marketplace known as Weedmaps.
Also, WM Holding Company is the parent company of WM Business, a software-as-a-service (SaaS) provider targeting to cannabis retailers and brands.
As the company states, WM Holding Company “solely provides software and other technology solutions and is non-plant touching.” So again, if you’re seeking an indirect approach to cannabis-market investing, this may be as good a candidate as any.
At the same time, Weedmaps and WM Business could prosper if the broader cannabis industry expands. And according to WM Holding Company, the U.S. cannabis market is expected to double over the next five years.
Growing Like a Plant
So, has WM Holding Company been able to capitalize on the burgeoning cannabis market so far, despite its indirect angle into this market?
We’ll let the numbers do the talking here. As the company reports, over the last five years, WM Holding Company has expanded its revenues at an astounding compound annual growth rate (CAGR) of 40%.
Moreover, WM Holding Company stated that it’s on track to deliver $160 million in revenues as well as $35 million in EBITDA (earnings before interest, taxes, depreciation and amortization) for 2020.
But are people actually visiting and utilizing Weedmaps? With more than 10 million monthly active users and over 18,000 business listings, it’s fair to say that the platform is growing like a plant.
And as for WM Business, Silver Spike Acquisition Chairman and CEO Scott Gordon succinctly summed up the value proposition by calling it “the only comprehensive ‘business-in-a-box’ software solution for cannabis retailers.”
The Takeaway
There’s nothing wrong with investing directly in cannabis cultivators. Yet, not every marijuana-market investment has to involve companies that touch the plant.
The data indicates that WM Holding Company is thriving amid the emerging U.S. marijuana market. And so, as an investor, you can take an indirect route to the cannabis universe with SSPK stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
