WM Technology (MAPS) recently reported Q4-2021 earnings and beat expectations on revenue and EPS. The company offers essential support services to the cannabis industry and is seeing growth in active users and paying clients.
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MAPS stock has been on a downtrend but has recently experienced some recovery. The company’s strong financial performance and future outlook allow for a bullish rating.
Q4-2021 Performance
WM Technology reported revenues of $54.2 million, representing a 22% increase year-over-year, and an EPS of $0.53. Gross profit was $52 million, or 96% of revenue. The company reported a net income of $78.4 million and adjusted EBITDA of $3.8 million. WM Technology estimates Q1-2022 revenue to be between $54 million and $56 million.
The company saw the addition of 300 new paying clients over the quarter. Monthly active users increased to 15.7 million, representing a 57% increase year-over-year. Average monthly paying clients increased to 4,766, representing a 23% increase year-over-year. The company foresees user numbers and paying clients to continue to grow through the next year.
Business Operations
WM Technology offers a website and phone app under the name Weedmaps, which connects cannabis users with local cannabis dispensaries, both medical and recreational. Cannabis users can search online for the products contained in their local dispensaries. The app allows the users to see the prices and inventory of all local dispensaries.
The company makes revenue by charging the dispensaries a subscription fee in order to have their shops and products listed. Weedmaps mainly operates in America and Canada. Dispensaries can pay for larger subscription packages, which allow for users to order products online for pick-up or delivery (where legal).
WeedMaps’s main competitor, Leafly Holdings (LFLY), went public earlier this month via a reverse merger with a SPAC. Leafly offers a similar online platform and service to cannabis users and dispensaries.
Although both companies have been in business for many years, we will have to wait until Leafly releases its first financial reports before adequately comparing the performance of the two companies.
Stock Price Performance
WM Technology’s stock price has been on a serious downtrend since November, dropping from the $13 price channel to the $4 channel. In February and now March, it has seen some recovery back to the $6 price channel. Today, it trades in the mid-$5 range.
The stock is up 16% over the past month. Larger volatility in the market is affecting the stock price. The company’s financial performance and recent stock trend encourage a bullish rating. I believe MAPS is undervalued, and momentum is slowly pushing the price back up.
Wall Street’s Take
According to Wall Street, WM Technology has a Strong Buy consensus rating, based on three Buy ratings assigned in the past three months. At $7.75, the average WM Technology price target implies 44% upside potential.
Conclusion
WM Technology offers an essential cannabis support service. The company reported impressive Q4-2021 financial results and expects more growth over the next year. Although suffering a downtrend, the company’s stock is experiencing recovery and higher momentum.
Cannabis support stocks may be impressive to investors who want exposure to the cannabis markets without the risk surrounding Canadian LPs or U.S. MSOs. With the company’s financial performance and recent stock recovery in mind, I rate the company as bullish.
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