Will Bruce Linton Take This Tech Stock to the Moon? 

Bruce Linton’s involvement at Martello Technologies Inc (TSXV:MTLO) may benefit the company, but the stock is already priced to perfection.

| More on:
Modern buildings in business district

Image source: Getty Images

Bruce Linton’s unexpected dismissal from the cannabis company he helped create was one of the biggest stories in the nascent legal marijuana industry this year. While serving as CEO, Linton took Canopy Growth Corp from a niche player to the world’s largest legal pot producer in less than six years.

However, key shareholder Constellation Brands, Inc. wasn’t pleased with the company progress and lack of profitability, taking the decision to oust the founder last week in search of new management. The announcement sent shock waves across the industry, knocking nearly four percentage points of market value off within a few days. 

In his first public appearance since the ousting, Bruce Linton wasn’t focused on the departure but rather on another unrelated small company – Martello Technologies Inc (TSXV:MTLO). 

Based in headquartered in Ottawa, the Martello is a software-as-a-service (SaaS) startup that provides unified communications (UC) performance management software, info-tech systems visualization software and SD-WAN technology. According to its website, these software solutions are used by 5,000 networks spread across 150 countries. 

Linton serves as co-chairman of the tech firm and actually helped take the company public in 2018. He’s also worn a Martello-branded T-shirt to most of his recent media interviews. The company’s CEO, John Proctor, told BNN Bloomberg that Linton now had “a little bit more time for us – and that brings an enormous value to our team.”

Linton confirmed that he was going to be helping the company, although he didn’t provide any details. While it’s too early to say whether he’s going to be taking a more active role at Martello, his non-compete agreement with Canopy’s shareholders prevents him from working in the cannabis sector in Canada, which could make a move to technology more likely.

Even if Linton isn’t joining the company full-time, his efforts to bring attention to the brand may have already helped Martello, which could leverage the attention from the investment community to raise more capital or push through more acquisition deals to enhance growth. 

However, the recent spurt has pushed the stock to an unreasonable level. Martello has only generated $7 million in revenue over the course of the past nine months. While the rate of recurring revenue and gross margin remain high, at 76% and 93.7% respectively, the company’s losses expanded to $2.9 million over the same period. 

Meanwhile, the stock trades at 10 times annual revenue and nearly six times book value. The market seems to have priced in Linton’s involvement at the tech company even though the former CEO has mentioned he may get involved in the cannabis sector in the United States, which means his role at Martello isn’t likely to be hands-on. 

Bottom line

Bruce Linton has earned his reputation as a high performing business leader with an eye for innovation, but Martello’s stock is already trading as if Linton is joining the company full-time and is about to change its fortune. In other words, the best-case scenario is priced in, and investors should be cautious.

For growth investors in the tech and cannabis sector, there are much better options at the moment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. 

More on Tech Stocks

edit Sale sign, value, discount
Tech Stocks

Got $1,000? 2 Stocks to Buy Now While They’re on Sale

These two top Canadian growth stocks look underpriced right now to buy for the long term.

Read more »

Two seniors float in a pool.
Tech Stocks

Could Nuvei Stock Help You Become a Millionaire?

Nuvei stock is favourably priced today for growth focused investors to buy. Could the stock enhance your chances to build…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Tech Stocks

2 Revolutionary Stocks I’d Buy Right Now Without Hesitation

Microsoft (NASDAQ:MSFT) and another tech titan that's worth watching going into March.

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

2 Top Tech Stocks Under $20 Per Share

Tech stocks are known for making millionaires. While it is difficult to identify them, these two tech stocks, each under…

Read more »

Growth from coins
Tech Stocks

2 Canadian Growth Stocks to Buy and 1 to Sell

The recent volatility in the stock market has created all kinds of opportunities for long-term investors.

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

3 Cheap Tech Stocks to Buy Right Now

Given their long-term growth prospects and discounted stock prices, I am bullish on these tech stocks.

Read more »

A worker uses the cloud for paperless work. tech
Tech Stocks

Wanna Beat the Market? Try These 2 Tech Stocks That Look Undervalued Today

Here's why undervalued TSX stocks such as Vitalhub can help you generate outsized gains in the next 12 months.

Read more »

Redwood trees stretch up to the sunlight.
Tech Stocks

These 3 Magnificent Stocks Keep Driving Higher

Constellation Software, Dollarama and another TSX stock have consistently generated positive investment returns. Here’s why they belong in your retirement…

Read more »