There's been a lot of buzz around India Globalization Capital, Inc. (NYSE:IGC) as of late. Recent announcements including plans to distribute IGC’s cannabinoid-based therapies in Germany, as well as plans to commercialize those therapies in Canada and certain licensed medical cannabis states in the U.S. have brought the company into the spotlight.
While we are still awaiting news from yesterday's Annual Shareholders Meeting, we wanted to shed some light on the IGC warrants that are trading on the OTC markets under the symbol IGCIW.
First, What are Warrants?
For those who are not familiar with the term warrants in an investment context, warrants are defined by Investopedia as "a derivative that confers the right, but not the obligation, to buy or sell a security – normally an equity – at a certain price before expiration." Very similar to options, "the price at which the underlying security can be bought or sold is referred to as the exercise price or strike price."
The big difference between warrants and options however are that "Warrants are generally issued by the company itself, not a third party, and they are traded over-the-counter more often than on an exchange."
IGC's warrants have an exercise price of $5.00 for 1/10 of a share. Essentially, 10 of these warrants give the holder the right to, but not the obligation to, buy 1 share of IGC for $50. Yes, you read that correctly, $50.
With a last traded price of $0.475 per share, IGC would have to go up more than 100x in to put these warrants in-the-money. If these warrants never expired, then maybe and only maybe would they seem attractive, even at their last traded price of $0.005 per warrant.
Unfortunately, these warrants do expire, and it's hard to believe that IGC will be up that high by 5:00 p.m. New York time on Wednesday, March 6, 2019. This is even after IGC extended the expiration from 5:00 p.m. New York time on March 6, 2017. What this does tell us is that IGC has the propensity to extend the expiration of these warrants, and may do so again in the future.
Before IGC hits $50 per share, we'll be watching to see if it reaches its recently set price target of $1.20 per share. Be sure to subscribe to one or more of our free e-mail newsletters so you never miss an important marijuana stock update. Also, don't forget to connect with The Daily Marijuana Observer on social media via Facebook, Twitter, StockTwits, YouTube, and Instagram.