If the stock market has a bad day, investors in the cannabis industry feel the pain deeper. That may not be a definite consequence, but it was exactly what happened yesterday. The overall obstacle on Monday's markets only exacerbated the bleak start of the marijuana sector in the week caused by a coincidence of bad news.
And against yesterday's closing bell, a long list of cannabis shares had suffered significant losses, with Tilray (NASDAQ 🙂 and Cronos Group (NASDAQ :), (TSX 🙂 leading down, each with more than 10% losses on the day.
Tilray was the heaviest hit and dropped 10.74% after Cowen & Co. analyst Vivien Azer downgraded a series of Canadian pot growers after a revision of the prediction for so-called cannabis 2.0 products. The Wall Street analyst said the food retailing, cannabis-infused beverages and other infused products will not meet earlier expectations. The bottom line: these products will not be the big solution that will strengthen growers' income shortages.
Tilray Weekly Price Chart
In a message to customers on Monday, Azer said that she has dropped her sales forecast for the Canadian cannabis industry by as much as 32% compared to her last forecast issued in November. She now believes that the Canadian marijuana market in 2020 will amount to C $ 3.5 billion (US $ 2.6 billion). The size of the market has been steadily degraded since January 2017, when Azer predicted that the market would reach C $ 7.2 billion (US $ 5.4 billion) sales.
Two major challenges
Azer pointed to two major challenges facing the cannabis sector in Canada: the continuing scarcity of stores, the slower-than-expected introduction of a wide range of 2.0 products and the continuing aggressive pricing of dried cannabis that is still available on the black market. She added that she expects 80% of the market for dried cannabis to be served by illegal suppliers.
Azer & # 39; s statement ended with the mention of Cowen lowered the rating of Aurora Cannabis ] (NYSE :), (TSX :), Sundial Growers (NASDAQ 🙂 and Tilray.
Tilray shares responded immediately. They went from US $ 18.13 to US $ 17.10 before collecting anything for the closing bell to end the day at US $ 17.29.
Aurora Cannabis Supply also went south. It lost more than 7% in New York and 5.88% on the S & P / TSX Composite, while the Calgary-based Sundial Growers, which is alone on the Nasdaq, bounced most of the day and 2.61% ditch
But the specific files that Azer mentioned were not the only ones affected. The sentiment of the announced downgrades was sufficient to allow various other pot stocks to turn down a little further.
Canopy Growth (NYSE :), (TSX 🙂 , Hexo (NYSE :), (TSX :), Medipharm Labs (OTC :), (TSX 🙂 and Curaleaf Holdings (OTC :), (CSE 🙂 all slid more than 6%, while Aphria (NYSE :), (TSX :), Aleafia Health (OTC :), (TSX 🙂 and Charlotte & # 39; s Web Holdings (OTC :), (TSX 🙂 all lost between 3.29% and 5.50%.
Cronos Stock makes a hit for delaying the profit report
Cronos Group shares fell more than 10% on both the S & P / TSX Composite and Nasdaq on Monday after the Toronto-based cannabis grower announced it was postponing the publication of its latest quarterly report.
Cronos Group Weekly Price Chart
Cronos was scheduled to reveal its financial figures for the fourth quarter of 2019 on Thursday, February 27, but in a statement issued early Monday said it had to reschedule the release without giving a specific reason. The statement simply said that there had been a "delay in the completion of the financial statement". No alternative date was offered on which the financial data would be made public
The company was also scheduled to review the year-end results for 2019, a year that was tough for the marijuana company.
Like many players in the cannabis sector, it saw much of its market capitalization evaporate in the second half of 2019. Shares of Cronos fell by more than 67% over the past year. After reaching their highest peak of 2019 in March of that year to trade at US $ 23.70 (C $ 31.77), they marched steadily down. So far, this Cronos share is no higher than US $ 8.55 (C $ 11.50)
They closed at US $ 6.37 (C $ 8.49) on Monday.
