WM Technology Stock: Back On A Strong Track (NASDAQ:MAPS)

Package delivery with marijuana, payment terminal

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While a lot of SPACs have failed to meet financial goals, the market continues to overlook businesses with strong growth potential such as WM Technology (NASDAQ:MAPS). The cannabis technology provider and marketplace hasn’t always met financial targets, but the owner of Weedmaps is still growing at a 30% clip. My investment thesis remains Bullish on the stock trading near the lows below $6.

Strong Business

WM Tech. went through a couple of tough periods where unlicensed customers were cut from the platform both in the U.S. and Canada. The end result was a view the business was struggling, but the reality is that the company had a strong business and the Q1’22 results highlight this situation.

The company reported revenues of $57.5 million, beating consensus estimates by $2.3 million. WM Tech. is back to generating nearly 40% sales growth with a forecast for ~30% growth going forward. These growth rates aren’t the type usually associated with 52-week lows for a stock.

WM Tech. still exhibits the type of growth opportunity which originally sent the stock up above $20. The company has a top cannabis marketplace with tech drivers producing 93% gross margins.

The user base jumped 52% to 16.4 million MAUs. The commerce platform continues to grow at levels making the addition of new Paying Clients almost automatic.

The company is both driving Paying Client growth along with average revenue per Paying Client jumping. For Q1’22, monthly revenues per client were up 9% to $3,810 while customers grew 28% to 5,026.

Paying Client slide

Source: WM Tech. Q1’22 presentation

WM Tech. actually ended the quarter with 5,141 Paying Clients and monthly revenue for Paying Client at $4,052. The monthly revenue ended the quarter 6.4% above the average for Q1’22 setting up numbers easily to the top end of guidance at $63.0 million. The business started Q2’22 at a $62.5 million monthly run rate.

The U.S. cannabis market isn’t even fully open yet with most states still operating under limited licenses led by multi-state operators (MSOs) not the main target of the suite of solutions offered by Weedmaps. As new states approve recreational cannabis sales and existing states open up retail licenses, WM Tech. is poised to grow. For this reason, the company still obtains the majority of revenues from the California market.

The market opportunity is massive considering the alcohol market has 10x the retail stores. WM Tech. is producing 30% growth here with a lot of cannabis market headwinds. Ultimately though, the market has 1,000% upside potential to match the retail license density of a similar product in alcohol.

Not Profitable Yet

The market doesn’t love that WM Tech. returned to reporting EBITDA losses. Despite having 93% gross margins in the quarter, the stock market appears more concerned about short-term profits versus the long-term growth opportunity in leading the cannabis space in technology and commerce.

The revenue guidance for Q2’22 at $61.5 million is about inline with analyst targets. The key here is WM Tech. maintaining the 30%+ growth rates pushing 2022 sales to $260 million and 2023 above $350 million.

Data by YCharts

To meet the 2022 targets, WM Tech. has to reach Q4’22 sales of $75 million. The stock has 144 million shares outstanding for market cap of ~$750 million. The stock trades at just 2x 2023 sales targets along with having a net cash balance of $56 million.

These “unprofitable” stocks are out of favor with the market, but investors should snap up WM Tech. at these valuations and so close to breakeven profits. The only real stocks to avoid are the ones with massive cash burn requiring large dilutive equity raises.

WM Tech. only burned $7 million in cash from operations in the quarter primarily due to a similar jump in A/R balances. Some customers in the California market are struggling to pay the bills and investors will want to watch for any impact to revenues going forward, though any customer cut off the marketplace would naturally cause orders to flow to another customer.


The key investor takeaway is that a leader in a technology based marketplace in a growth sector like cannabis doesn’t often trade at a forward EV/S multiple of 2x. WM Tech. struggled out of the gate after closing the SPAC deal, but the company is firing on all cylinders again.

Investors should use the current weakness in the stock to load up on a market leader.

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