What’s Next For Namaste Technologies After Ousting CEO?

by Trefis Team
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Namaste Technologies’ (CVE:N) stock has tanked of late, after the company announced that CEO Sean Dollinger had been terminated for cause after an internal investigation found “evidence of self-dealing” and “breaches of fiduciary duty.” The company also announced that it will be undergoing a review of strategic options, which could potentially include the outright sale of the company. The stock is now trading below $1, down from nearly $3 in late September when a short-seller leveled allegations of fraud that prompted the company’s internal investigation. Investors will be eagerly awaiting the results of the review of strategic options, though given the turmoil and depressed valuation, it may not be an opportune time to seek a buyout.

Namaste is an emerging company in the cannabis-related market, selling vaporizers and other accessories through its 30 e-commerce websites across 20 countries. While the company focused primarily on the medical side until recently, it has taken steps to capitalize on the growth potential of Canada’s recreational cannabis market.

Given the turmoil surrounding the company, and its relatively murky outlook, we have cut our price estimate for Namaste Technologies to CAD 2 per share (around $1.50). Our interactive dashboard analysis on Namaste Technologies’ Valuation outlines our near-term expectations for the company. You can modify any of our key estimates or forecasts to gauge the impact changes have on the company’s valuation, and see all Trefis Consumer company data.

What’s Next For The Company? 

Namaste’s board elevated Meni Morim, the company’s Chief Product Officer and Director of AI, to the position of CEO. The company sent a letter to shareholders stating that the company’s operations will continue uninterrupted during the strategic review, and discussing its ongoing innovation initiatives including “Artificial Intelligence capabilities that are being deeply integrated into [the] customer experience.” However, at this point it is very possible that the company ultimately pursues a buyout, despite the depressed valuation. Given its potential in the fast-growing market, solid technological capabilities and sales pipeline, there could be a few suitors for its business (such as Canadian cannabis competitors or even a larger tobacco company potentially). With the stock trading well below the levels it saw for much of 2018, a suitor could potentially acquire the company at a relatively attractive price tag.

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