Cannabis advertising giant Weedmaps hopes to boost its revenue over the next three years by a whopping 175% – and investors are wagering the California-based company can deliver on that goal.
Since announcing its acquisition of Weedmaps on Dec. 10, Silver Spike Acquisition Corp. has seen its shares more than double, resulting in a Weedmaps valuation at 21 times sales and 98 times EBITDA for 2020.
The stock – which trades as SSPK on the Nasdaq – climbed another 22% after the company filed a Form S-4 with the U.S. Securities and Exchange Commission on Jan. 19, which included audited financials and more detail about the deal and company operations.
Silver Spike Acquisition Corp. plans to take Weedmaps public on the Nasdaq through the deal. So why are investors bidding up the price of the blank-check acquisition company?
In Weedmaps, investors see a profitable, high-margin, fast-growing ad tech and software business that happens to be tied to cannabis sales – but one that does not touch the plant.