Constellation Brands, Cannabis, Zillow discussed on MarketFoolery



I mean, I get, I get the idea that you know, you wanna take the edge off and so you got your glass of Manabi wine or you've got, you know your corona beer and maybe you're throwing in a blunt there too. I mean, there's definitely some I hate to use the word synergy between cannabis and alcohol, and I think you know people who have won probably love the other, but this deal doesn't make sense to me. So you have this candy growth business, which by the way trades for about one hundred times revenue right now, roughly they're taking a four billion dollar stake in it. This is all, because as we know, this is a Canadian company Canada's going to be fully legalizing. Marijuana use beginning October, you had doc Tober. And so there's intensification that will sales for this company are going to surge. We're going from just this medical marijuana industry now to full-fledged marijuana for everyone. And so the sales are gonna surge. I think that's a terrible way to look at because I think can't be growth is probably one of dozens of companies if not hundreds of companies that are going to be flooding into this market, and really the supply that's out there is going to shoot higher. And I think what's going to happen is you're gonna see, as we've seen in in US states that have legalized in in this country in Colorado Washington state, you've seen a marginal increase in cannabis usage, but the supply has gone through the roof. And what happened is, what's what happens generally when that happens, prices come down. So I think this is a pretty poor investment, and I think the markets, recognizing it see, rub sands from constellation brands said as people wanna consume cannabis in a more. Biscuit manner. Beverages will become more common delivery delivery mechanism. We're not restricting ourselves to beverages just because we're a beverage company. You know, even if directionally, he's right. The number just still seems out of why it's it's the four billion number and to jump from basically a ten percent stake to thirty eight percent stake when we talked about this recently with with Zillow and how part of the sell off last week with Zillow had to do with their acquisition of. The mortgage lenders of America. That's right and Zillow, not having the greatest track record in terms of acquisitions, I would argue the same thing with constellation brands. They paid a billion dollars for balanced plant huge premium, which, yeah. And then by the way met and that happened, I think two years ago, roughly what we call them where we're syncing now could've been the peak of craft beer. So I mean, that was that was a big price to pay and you look at their portfolio of brands? Sure. They've got some recognizable brands, but it's not like a murderer's row of of beer wine and spirits. So I, I don't know. Yeah, and and that's the thing too is is, okay. You've got this year and canopy growth, but there are, there are no established brands and the cannabis industry. So what are you really adding here? I think what they're doing is they're picking what they think is going to be the leader in this, you know, this young market and maybe they're being a little forward thinking, but it's going to be so hard. You're investing in a commodity product. There's no doubt about it. I don't think consumers are gonna distinguish between academy growth branded, you know, version of. Pot versus another companies, and they're spending a huge amount of money to do it, the returns. I don't think the return is going to be very good with this. We haven't really talked about international investing on the show in a while, and I wanted to touch on this. We were..

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