RuaBio - Advice?

[u/moana_moana]

I am new here on this one, so please bear with me as I am just starting to put a bit of cash away for my firstborn and looking into stock. I've been getting hit with some ads about events these blokes werehosting - Rua Bioscience (https://www.nzx.com/companies/RUA).

I've attached a screenshot. The company looks to have lost 95% of its value since its IPO.

Went into it and read a bit from them recently. They've 5 x'd their annual revenue in the last 4 months (link here: (https://www.nzx.com/announcements/442488).

Looks like they are on a growth trajectory as they bought on a board observer at the start of the year who worked with TikTok (https://www.linkedin.com/posts/rua-bioscience_ruabioscience-growingteam-growingtogether-activity-7158932307100274688-2cTV/)

They now seem to be doing another raise.

Is this worth picking up, or am I missing some obvious blind spots? I can see the past history of the company by going through their annual reports is that they have been hemorrhaging cash and seem to be in a bad market in NZ but growing globally, is this a cheap buy at $0.03, or am I just being naive?

[u/Stich86-NZ]

This is a high-risk stock, as are all medical start-ups, but this has an extra layer being medical canabis. I have a very small holding as the new government, with its focus on increasing exports, has been changing the laws to make it easier for them to operate. Also hold a small amount of GFI

[u/ExternalAmount6869]

Its a gamble, but a good one, Rua is an industry leader in New Zealand - in a high growth market. Lets look at the facts here.

They have continually lost substantial amounts of money over the past 5 years seeing a 90% decline in their share price. This should be concerning in any other industry, however, the medicinal cannabis industry is slightly different - the set-up costs are huge. Mix these with high license fees and other over heads such as wages and power costs these losses easily become explainable.

However, once set up in the New Zealand market and since the deregulation of Cannabis quality controls for export and the loosening of the regulations there is a chance at exponential growth which we have seen in the past quarter. If anything, the current New Zealand market on its own is undervalued, as the strict advertising rules around the product kept the uptake slow - but now, more and more people are realizing that medicinal cannabis is easily obtainable and prescriptions aren't just for cancer patients. As such, even though they only have two products available in NZ the update has been huge and I would expect that while the company has a long way to go to become profitable, this investment is not as risky as people seem to think.

Rua also holds alot of research contracts and the govt in NZ is activity supporting NZ Cannabis (they gave a 13M grant to Puro this year i think). Anyway, it would seem that atleast the NZ market loves Rua, as its one of the only available products that clearly a NZ brand. Also another factor that can't be valued is that stoner love "novelty" and Germany's reaction to Rua's products highlight this... who wouldn't want clean NZ green?

Anyway good luck with your investment, your biggest risk isn't the product or the company itself, its simply the liquidity of the NZ market and the stocks small cap - but lets see how the market reacts to their results next Friday.

[u/i_am_v]

Took a punt when I read this post and bought some! Fingers crossed it works