In a recent equity research report, Zuanic & Associates provided a neutral perspective on WM Technology (MAPS), a prominent player in the cannabis sector. The report highlights the company’s unique market position and prospects for growth.
Pablo Zuanic, Z&A’s senior analyst, stated, “We initiate coverage of WM Technology with a Neutral rating. Trading at 0.6x sales (vs. 4.5x for comparable e-commerce/SaaS stocks), the stock valuation does not properly reflect MAPS’ unique franchise as the leading online cannabis consumer marketplace.” Despite this undervaluation, the company’s dominance in key markets and a market cap of $142 million indicate its potential in the cannabis sector.
When comparing WM Technology to other sectors, the report reveals that for the calendar year 2024, MAPS is trading at 0.5x sales and 4.2x EBITDA. These figures are projected to be even lower for 2025 at 0.4x sales and 2x EBITDA. In comparison, Vertical SaaS stocks are trading at 5x sales and 17x EBITDA, marketplace stocks at 3.3x sales and 11x EBITDA, and e-commerce enablement stocks at 5x sales and 46x EBITDA.
Zuanic & Associates calculated MAPS’ enterprise value (EV) at $121 million, taking into account net cash of $28 million and leased net of right-of-use assets of $7 million. The report excludes the minority interest of $95 million reflected in the non-controlling share classes. With the current EV of $121 million, MAPS trades at 0.6x current sales and 5x current EBITDA.
The report also addresses growth prospects and challenges for WM Technology. The company aims to expand beyond its primary markets (CA, CO, MI, OK) with the growth of the US cannabis market. However, the report acknowledges hurdles in these markets and near-term growth limitations. Zuanic noted, “Overall US cannabis market growth should be a key driver of company growth, although we note company revenues have lagged the US market and its home market of CA since 3Q22.”
Strategic shifts and revenue streams are also discussed in the report. MAPS has narrowed its focus away from being a “one-stop” solution provider. The company’s revenue growth strategies include enhancing existing customer bases and expanding into new accounts, despite risks from recent pricing structure changes.
The report concludes by presenting possible future scenarios for MAPS. The bullish case envisions the company leveraging its market position for substantial growth, while the bearish case suggests potential struggles due to market saturation and strategic risks. Zuanic described a potential bullish scenario for MAPS, citing factors such as rescheduling news for cannabis stocks, acceleration in the US cannabis market growth, and positive fundamentals.
However, Zuanic also acknowledges the bearish case, stating, “There is a risk the backlash in CA worsens and that the company loses penetration while realizing little increased revenue per paying client there and that MAPS fails in expanding penetration in new states (and or CO and MI).”
In summary, Zuanic & Associates’ equity research report offers a neutral perspective on WM Technology (MAPS) in the cannabis sector. It highlights the company’s unique market position, undervaluation, growth prospects, and challenges. The report concludes with possible future scenarios, considering both bullish and bearish outcomes for the company.
