MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) announced last week that its co-founder and CEO Adam Bierman will be stepping down and will not at the helm as from the beginning of February. Following the announcement the company saw its stock jump 7% and at some point it was up 0ver 16%.
MedMen stock has lost 85% in the past year
Usually it rare to get a stock rallying when a CEO leaves a company and although cannabis stocks experience a lot of volatility this news seemed to boost investor confidence. In the last 12 months, MedMen stock has been in free fall having lost over 85%. Its stores were popular among consumers and even though the company has had strong sales its losses have been piling.
In the last quarter, the company reported that it used $44 million in funding its operations. Although this is a significant improvement from the $50 million it used the previous year it is still a significant amount of cash. The company has to contend with declining share price and lack of profitability which have aggravated the situation.
Investors had concerns about MedMen leadership
The change is welcome considering the company’s former CFO had sued the company last year in which he indicated that the CEO and the management were wasteful in spending. Although the company denied the allegations it is evident from the rally that even investors had concerns about Bierman and his departure is good news. So far the company has not replaced Bierman but it has indicated that it is considering both external and internal candidates for the post.
The leadership change may spell a change in direction but that will be evident once a new CEO assumes office. If the company gets an internal replacement the change may not be as rapid as it would if an external candidate is appointed. But even with a new leader considering the financial woes of the company, it might be hard to quickly turn things around.
For now, MedMen is a risky buy even without Bierman and investors will be looking at the company’s Q2 results expected this month.