Sproutly Canada, Inc. (CSE:SPR) (OTC: SRUTF) has skyrocketed this week with the share price doubling since Monday. With no recent announcements being made by The Company and no earnings being released, it was a bit of a mystery behind why the stock had taken off all of a sudden. As a result, Sproutly was asked to comment on the unusual activity.
According to a release issued by Sproutly on Friday, The Company has been negotiating with an unnamed beverage company to develop cannabis-infused drinks. It didn’t disclose where the trading was coming from, but there has definitely been a big spike this week with the stock trading at volumes of well over a million per day, and normally it is well under 500,000.
News of a potential deal, especially involving beverages, is sure to attract attention from investors. Despite the hype surrounding cannabis beverages, we haven’t seen many big deals thus far. While we’ve seen Constellation Brands, Inc. and Molson Coors Canada link up with cannabis companies, there are still many major players sitting in the sidelines. Diageo and Coca-Cola are some of the bigger names that we’ve seen rumoured to be involved but we haven’t seen anything significant materialize just yet.
Sproutly was careful to note that although it is pursuing a deal and it hopes that one will be reached, it is by no means a guarantee:
Sproutly remains optimistic that the Potential Transaction will be successfully completed by the end of April, however there can be no assurances that the Potential Transaction will be completed, or completed in a timely manner. In accordance with applicable disclosure requirements, Sproutly will advise the market of any material transaction as it occurs.
On Friday, the stock climbed a total of 24%. If a deal does indeed close, there’s certainly potential for the stock to go even higher, depending of course on the nature of the deal and who it involves. What makes Sproutly’s potential deal intriguing is that it used the words “partnership” along with “develop and market,” suggesting a much stronger bond than say just a “research partnership.”
A Move That Could Put Sproutly on the Map
With no sales yet and a market cap of $150 million, Sproutly is still a fairly small player in the industry. News of a big deal with a company from another industry, however, could quickly change that, especially if it involves beverages. The edibles market will be legalized at some point this year and when it does it could create a lot of buzz, especially with cannabis-infused drinks looking to be the next big thing in the industry.
For now, however, investors will have to remain patient to see if anything happens over the course of the next month. But if the potential deal ends up falling through, it could spell disaster for Sproutly’s share price.
As we get further along in the year and closer to the legalization of edibles, we could end up seeing more beverage deals take place as companies don’t want to miss out on what’s sure to be an incredible opportunity.