Unearthing Hidden Gems: Evaluating MAPS, the E-Commerce Weed Stock

By: Alex Freidmen

An extensive equity research done by Zuanic & Associates sheds light on the undervalued potential of WM Technology MAPS, a forerunner in the cannabis sector, outlining its distinctive market standing and future prospects.

Exploring Market Position And Valuation

“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,” stated Pablo Zuanic, Z&A’s senior analyst.

Despite being undervalued, its dominance in crucial markets and a market cap of $142 million underscore its potential in the cannabis sector.

  • For the calendar year 2024, WM Technology (MAPS) is trading at 0.5x sales and 4.2x EBITDA. For 2025, these figures are projected to be even lower 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’s enterprise value (EV) at $121 million, considering the latest share count and the current share price of $0.88, resulting in a market cap of $142 million.
  • For calculating EV, they took into account net cash of $28 million and leased net of right-of-use assets of $7 million, excluding the minority interest of $95 million as reflected in the non-controlling share classes.
  • With the current EV of $121 million, MAPS trades at 0.6x current sales (based on the annualized 3Q23) and 5x current EBITDA.
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Evaluating Growth Prospects And Challenges

The company eyes growth beyond its primary markets (CA, CO, MI, OK) with US cannabis market expansion. However, it faces hurdles in these markets and near-term growth limitations. Fiscal reports exhibit fluctuating sales and EBITDA figures.

“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),” Zuanic noted.

Strategic Shifts And Revenue Streams

The report states, “MAPS has narrowed its focus away from a “one-stop” solution provider.”

Zuanic explains MAP’S revenue growth strategies include ameliorating existing customer bases and expanding into new accounts, despite risks from recent pricing structure changes.

Running The Bull And The Bear Scenarios

The report concludes with possible future scenarios. The bull case sees MAPS leveraging its market position for substantial growth, while the bear case suggests potential struggles due to market saturation and strategic risks.

Zuanic outlined a potential bullish scenario for MAPS: “From a technical perspective, the stock could move up if cannabis stocks surge on rescheduling news… From a fundamental perspective acceleration in the US cannabis market growth… should all bode well for MAPS.”

“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),” Zuanic added on the bear case.

Photo: AI-Generated Image.