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Greenlane Holdings (GNLN) Stock Price Rallied 22.5% on a $5.3M Sale

Simon Mugo trader
Updated 20 Jul 2022

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Key points:

  • Greenlane Holdings (GNLN) stock price rallied 22.5% on a  $5.3m sale.
  • Investors cheered the move, which shows that the firm is undervalued.
  • So are GNLN shares a buy? Read on to find out.

The Greenlane Holdings Inc (NASDAQ: GNLN) stock price rallied 22.5% after announcing that it had sold its stake in VIBES Holdings LLC (VIBES) for $5.3 million in cash. The seller of premium cannabis accessories said that the divestiture was aligned with its overall strategy of recapitalising its business.

Today’s sale highlighted the significant discount GNLN stock is trading in the public markets, given that the company’s current market value is a mere $26.74 million. In comparison, it sold a small stake in a business it owned for over $5 million.

Also read: The Best Growth Stocks To Watch In 2022.

There is a significant variance between Greenlane’s stock price and the company’s real value to private investors shown by today’s transaction. The VIBES stake was valued at 1X the company’s trailing 12 months’ revenues, with Greenlane saying that its VIBES stake was valued at over six times its current market value.

Investors’ positive reaction was echoed by the CEOs of the two companies, as seen in their written statement below regarding the acquisition.

Nick Kovacevich, Greenlane’s CEO, said: “We are pleased to bring in $5.3 million through this sale. We are even more pleased to see one of our brands privately valued at six times more than where our total business is currently being valued in the public markets. We admire the VIBES brand and its premium products and look forward to working strategically with the ownership group to ensure that VIBES continues to expand and succeed in the marketplace.”

Berner, the CEO of VIBES, said: “We are very excited to complete this strategic transition. As a brand builder, we feel that VIBES is just scratching the surface and its future trajectory is extremely compelling. We appreciate everything Greenlane has done as a partner to get VIBES to this level, and we look forward to leveraging their distribution expertise and vast customer network in the future as we continue to make VIBES a staple product on shelves around the globe.”

So, should you buy Greenlane Holdings stock? The answer for me is yes, the company is undervalued and could rally higher in future if the management keeps making the right moves.

*This is not investment advice. Always do your due diligence before making investment decisions.

Greenlane Holdings stock price.

Greenlane Holding stock price 20-07-2022
Source: Tradingview

The Greenlane Holdings stock price surged 22.5% to $0.24, rising from Tuesday’s closing price of $0.1942.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading