Could Kanabo Group shares soar if UK medical cannabis sector matures?
Kanabo Group shares rocketed upon entry to the stock market, rising from an issue price of 6.5p to 20.8p per share on the opening day. Will the rise of specialist medical cannabis clinics benefit Kanabo Group investors?
- Kanabo Group shares triple on stock market debut
- £6 million raised via oversubscribed fundraising
- Kanabo Group blazing a trail for cannabis stocks since Financial Conduct Authority (FCA) approval
- Want to start trading the Kanabo Group share price? Open an account today
Kanabo Group PLC (KNB.L) experienced an encouraging initial public offering (IPO) upon its UK stock market launch, with an issue price of 6.5p rapidly surging to 20.8p per share on 16 February, the opening day of trading.
The Israeli-founded company, which makes medical-grade vaporisers for cannabis to ease physical ailments, was initially valued by investors at £23.2 million but that value rose after being floated.
Will the FCA’s green light for cannabis stocks create a bullish trading climate?
Avihu Tamir, chief executive officer (CEO), Kanabo, believes the medical cannabis sector is 'set to take off' across the UK and that this 'is just the beginning' for this burgeoning sector. Much of that positivity is founded upon the FCA's approval of cannabis stocks on the London Stock Exchange (LSE).
FCA published new guidance in September 2020 regarding the ability of cannabis companies to float themselves on the LSE. The framework requires all companies to be medicinal or purely CBD related, with no recreational businesses permitted.
Kanabo Group’s exclusive VapePod is the world’s only medicinal cannabis vaporiser, designed to provide metred dosages of cannabinoid extract with no additives or diluents. Kanabo Group intended to use the income generated by its IPO to commence clinical trials of its latest products.
Specialist medicinal cannabis clinics easing supply for vaporisers
The rise of private clinics enables medicinal cannabis to be prescribed on a case-by-case basis, using licensed products like Kanabo’s VapePod to ease ailments relating to chronic pain, as well as neurological or psychiatric conditions. In years gone by, general practitioners have been loathed to prescribe medicinal cannabis, while access to imports was another cause of the product’s bottleneck. These clinics open the way for newly-floated companies like Kanabo.
What other cannabis stocks are there to watch?
MGC Pharmaceuticals Ltd (LSE) also recently floated on the LSE and its share price has also soared from a float value of 2.38p to highs of 7.43p. The Australian-headquartered company developed medicinal cannabis treatments focused on treating Covid-19 patients, as well as individuals affected by epilepsy and Alzheimer’s disease.
MGC Pharmaceuticals made an operating loss in the last year, although revenue growth soared by 213% year-on-year (YoY). Meanwhile, Kanabo Group recorded retained losses of £3.1 million in 2019 and is not yet profitable either. Kanabo, unlike MGC Pharmaceuticals, also has a relatively short trading history which could deter some investors.
Still, the global legal cannabis sector is forecast to expand at a compound annual growth rate (CAGR) of over 30%.
Confident in the future of Kanabo Group shares?
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