• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Saw Your Investments Go to Pot? Consider Cannabis Tech

Here are two tech-infused names to watch this year.
By DEBRA BORCHARDT
Aug 26, 2020 | 11:30 AM EDT
Stocks quotes in this article: ITHUF, KERN, PRTH, MA, V, DRVD

The destruction of cannabis company valuations in 2019 made investors nervous. Many have lost thousands of dollars investing in public companies. Some shareholders were worse off: Those in iAnthus (ITHUF) , for example, may have even lost their entire investment as the company gets turned over to its creditors.

So, it is understandable if tried-and-true cannabis investors are choosing to be conservative.

But technology and software seem to hold the most promise at this time for cannabis investors, as seen by venture-backed names -- and some public ones. The private companies are pulling in the capital and the public companies seemed to have stopped the bleeding. E-commerce company Dutchie just raised an additional $35 million bringing its total capital raise to $53 million. Dutchie processes approximately 75,000 orders a day -- a marker that continues to increase -- and is facilitating over $2.4 billion in annualized sales. Software company Fyllo picked up an additional $10 million to expand beyond cannabis bringing its total fund raising to $26 million.

Spring Big had a funding round of $11.5 million, recently, too. Launched in June 2020, Brands by Spring Big is a first-of-its-kind brand marketing platform that allows brands to directly reach cannabis consumers through targeted text messages. The platform provides an avenue for brands to drive direct-to-consumer engagement while staying compliant with strict cannabis regulations.

Here are some tech-infused names to watch:

Akerna Has Street 'Cred'

One of the OG's of cannabis tech, Akerna  (KERN)  made news last week, but seemed to slip under the radar. But the announcement could potentially have a big impact on the industry. The company signed an agreement with Priority Technology Holdings, Inc.  (PRTH)  to provide CBD and hemp retailers that use Akerna's MJ Platform with a credit card payment processing service. Visa (V) and Mastercard (MA) have been adamant that their credit cards will not be used for cannabis transactions. This has caused a great deal of difficulty for dispensaries who are reliant on either cash-only transactions or awkward workarounds.

"With this solution, we are making it easier for our CBD and hemp clients to process payments. With this agreement, we are also well positioned to activate payment solutions through Priority for traditional cannabis sales pending legislative action at the federal level," Jessica Billingsley, chief executive officer of Akerna, said.

As part of the agreement, Akerna and Priority Technology Holdings will share in payment transaction revenue.

Akerna's stock was lately trading at $5.88, up considerably from its 52-week low of $3.16. The one analyst covering the company has a price target of $15.

Driven Deliveries Pulls Up

Driven Deliveries (DRVD)  has had great timing. The company provides e-commerce services, online sales, and on-demand cannabis delivery, in select cities where allowed by law. Driven offers cannabis consumers same-day and next-day delivery. During the Covid-19 lockdowns, this has been a blessing in disguise. The company may also benefit from the challenges facing its competitor Eaze, who faced financial trouble before the pandemic. 

Driven recently reported quarterly revenue of $5.7 million in the second quarter of 2020, a 158% sequential increase over the first quarter. But rather than just dispensary delivery, Driven can work with brands to deliver products directly to the customer from the brand's website. The company's Ganjarunner and Budee divisions now have more than 244,600 registered cannabis consumers. Customer acquisition costs are declining as orders are increasing. The company reported a net loss of $3.7 million as the company integrated acquisitions and killed some debt.

In July, Driven said that its average orders per day rose to 1,008 and the monthly revenue rose again by 4.4% to $2.1 million. The customer acquisition costs dropped once again and six new direct-to-consumer brands were added to the Brand Budee platform.

"Leveraging technology has enabled us to exceed our growth plans while reducing our operating expenses," said CEO Christian Schenk. "With these savings, we are able to provide consumers with better experience along with competitive pricing including daily deals, no minimum order requirements and free delivery. Our competitors have large minimums, delivery fees and very few meaningful promotions which means they either struggle with unit economics stemming from gaps in technology or they refuse to pass savings on to the consumer."

Driven's stock was lately selling at $0.43 and has no analyst coverage.

Investors seem willing to jump into private companies that are in these various e-commerce platforms, so these public companies should also begin to outperform. The market continues to deal with the fall out of the pandemic lock downs and if we see further spread in the months ahead, then these online and delivery companies should continue to benefit.

(MA is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? Learn more now.)

 
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Borchardt has no positions in any of the company's mentioned in this story.

TAGS: Venture Capital | Investing | Stocks | Technology | Cannabis

More from Stocks

Nuvalent Has Begun the Bottoming Process

Bruce Kamich
Jul 1, 2022 10:52 AM EDT

Let's check the charts and indicators.

You Can Invest in Micron, But Here's Why You May Want to Wait

Stephen Guilfoyle
Jul 1, 2022 10:15 AM EDT

MU reported earnings Thursday night and the guidance was shocking.

The Charts Point to More Selling Ahead for 4 Former Tech Leaders

Ed Ponsi
Jul 1, 2022 10:00 AM EDT

Keep in mind that no matter how much a stock has fallen, it can always go lower, and it appears these four stocks could prove that point.

Enanta Pharmaceuticals Bounces Off a Key Support Level Once Again

Bruce Kamich
Jul 1, 2022 9:41 AM EDT

The shares of the biotech company appear to be finding a bottom but could use more sideways action to create a better base.

CRISPR Therapeutics Has Turned the Corner

Bruce Kamich
Jul 1, 2022 8:43 AM EDT

Here's our current price target.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:59 PM EDT PAUL PRICE

    Very good quarterly numbers from Bassett Furniture (BSET)

    Bassett Furniture (BSET) blew right through analys...
  • 04:41 PM EDT PAUL PRICE

    First Half Results - Putrid Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 marked...
  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login