When Canopy Growth Corp (TSX:WEED)(NYSE:CGC) announced that CEO Bruce Linton was no longer going to be with the company, it sent some shockwaves through the industry. With some big losses in its most recent quarter and key shareholder Constellation Brands, Inc. (NYSE:STZ) seeing its financials being weighed down the company’s performance, there was pressure on the beer maker to do something.
Whether this will hurt the company’s position atop the industry and the long-term impact is debatable. However, one thing that isn’t debatable is the impact that Linton has already been having on a much smaller company.
Martello Technologies Inc (TSX-V:MTLO) has seen the value of its shares skyrocket in the past week, not because the company had terrific earnings or unveiled some revolutionary product. Rather, it all started when Bruce Linton wore the company’s shirt on Wednesday after being let go by Canopy Growth.
Linton also said he was going to be helping the company — in what capacity is unclear, but the results have already been phenomenal.
Before Bruce Linton associated with Martello, the stock was trading at just 19 cents a share. By Friday’s close, it had soared to 55 cents, and it reached as high as 60 cents — more than triple what it was before Linton indicated he’d be working with Martello. It’s a remarkable turn of events given how little has really happened besides the company gaining exposure.
Linton does have a tech background, and so working with a tech company should not come as a big surprise. However, for a stock to go from trading at average volumes of 130,000 to reaching 20,000,000 on Friday, his presence has had a staggering effect on the stock in just three days.
The big question going forward is whether we’ll see a correction in the coming days or this will be the start of an even bigger rally. The danger is that hype can lift a stock to hitherto unimaginable heights; investors just have to look with what happened during the Bitcoin craze as proof of that.
Takeaway for investors
We saw with Apple leader Steve Jobs just how important a strong leader and visionary is. Bruce Linton has also been a very important figure for Canopy Growth as well. While he might not necessarily have revolutionized cannabis the way Jobs changed telephones, it’s under his direction that Canopy Growth became a $20 billion company.
The more deeply involved Linton is with Martello, the more investors will be willing to take a chance on the stock. Linton’s impressive track record with Canopy Growth has earned him a strong pedigree and reputation with investors. That said, sooner or later the hype will ease and there will have to be some substance behind the stock; otherwise, we could witness a big correction.
Just how high Martello might fly with Linton now on board is anybody’s guess.