MW Weedmaps founders want to take the company private as cannabis sector runs into headwinds

By Steve Gelsi

Stock has doubled this year, but it's still trading at a fraction of its peak of nearly $28 a share in 2021

The founders of Weedmaps want to call it quits on the company's stock and have offered to take the cannabis store-finder service private for about $100 million due to headwinds in the sector, despite a strong share price performance this year.

WM Technology Inc.'s stock $(MAPS)$ was up 5% in premarket trading on Thursday.

On Wednesday, the stock jumped 13.9% to close at $1.39 a share after co-founders Doug Francis and Justin Hartfield offered $1.70 a share to buy roughly 68% of the company's stock that they don't own.

The move comes about three years after WM Technology went public through a merger with a special purpose acquisition company, or SPAC.

"WM is facing significant headwinds, with licensed end-markets continuing to decline from the peak volumes achieved at the time of the company's de-SPAC transaction in 2021," Francis and Hartfield said in a letter to shareholders.

The consolidation of cannabis retailers and brands by multi-state cannabis operators, combined with competition from traditional technology providers into cannabis pose "significant risks for WM's current business model as a public company," the two co-founders said.

Rivals such as Alphabet Inc.'s $(GOOG)$ Google Maps have been providing information on how to find dispensaries - a core part of the business of Weedmaps, along with reviews and other tips for marijuana shoppers.

Although the two co-founders remain "deeply passionate" about the company, the proposal to take the company private would provide stockholders with "immediate liquidity" and certainty, they said.

The stock peaked at nearly $28 a share in 2021 when Weedmaps went public, only to fall to below $1 a share two years later.

In 2024, the stock has traded between 70 cents a share and $1.56 a share, with a market capitalization of $187 million at last check.

Jefferies LLC is advising Weedmaps on the take-private deal, which would require approval from a special committee, the company's board, and a majority shareholder vote.

Also read: WM Technology (Weedmaps) shares fall sharply after it misses revenue target and issues warning

-Steve Gelsi

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December 19, 2024 08:24 ET (13:24 GMT)

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