Last week was like a bomb that struck the cannabis industry. By the time the dust settled, no less than $ 5 billion (C $ 6.6 billion) in market capitalization was wiped out from the value of the five largest companies in the sector
It also revealed serious fault lines that threaten to destabilize smaller companies. All this raises serious questions for investors and companies who are still trying to increase expansion and navigate the rollout of derivatives.
The extent of the destruction became more apparent as the week progressed – a five-day period in which the profit reports of more than a dozen cannabis companies were revealed. The trend became sharper with every win report. The income decreased. Then the questions came up. Where did all this go?
Investors began to flee without definitive answers.
In an interview with BNN Bloomberg, a sector director, Aurora Cannabis, executive chairman Michael Singer said:
"What you've seen is a market that is uncertain about where to go from here."
Now the overarching question is: is the blood passing? Or will it continue?
At the heart of the crisis, at least on the Canadian side of the border, is the delay in licensing stores, especially in Ontario. This has caused a bottleneck because companies have expanded their offerings while the legalized market has failed to meet consumer demand, creating an oversupply that has exerted downward pressure on prices. All aspects of this – including, as a consequence, continued competition with the black market – have manifested themselves in weak operating results.
How has the cannabis market changed in the past week? Let's see what happened to some companies that reported:
Canopy growth:
Shares of Canopy Growth (NYSE :), (TSX) :), the largest marijuana grower in the world, took a dive last Thursday after the Ontario-based company revealed its latest report with a net loss of C $ 374.6 million (US $ 283.68 million).
Net sales amounted to C $ 76.6 million (US $ 58.21 million), an increase over C $ 23.3 million (US $ 17.65 million) in the same quarter of the previous year, but considerably lower than the C $ 90.5 million (US $ 68.54 million) in the previous three-month period.
Weekly price chart of the canopy
The company's share price responded immediately and dropped from US $ 18.50 (C $ 24.45) to end the day on US from the end of the previous day. $ 15.70 (C $ 20.76), dropping an estimated 15%. The fall in Canopy's share price continued on Friday and Monday.
For the week, the decline in Canopy went from US $ 20.59 (C $ 27.25) to yesterday's closing of US $ 14.22 (C $ 18.77), a decrease of about 31%.
Aurora Cannabis
Last Thursday, Aurora Cannabis (NYSE :), (NYSE :), ( TSX :), a major Canadian grower based in Edmonton, an EBITDA loss of C $ 39.7 million (US $ 30.06 million), a much larger deficit than the loss of C $ 26.6 million (US $ 20) , 14 million) in the previous three-month period and the projected target of a deficit of C $ 20 million (US $ 15.15 million).
Aurora Cannabis weekly price chart
The stock price has since fallen steadily, going from US $ 3.57 (C $ 4.71) at the end of the day before reporting on November 13 to close yesterday at US $ 2.28 (C $ 3.00), a decrease of 35.8%
Cronos Group and Tilray
Toronto cannabis producer TSX 🙂 and Tilray (NASDAQ :), based on the west coast, were the only producers to report sales profits in their earnings reports, but that didn't stop their stock prices from taking a nasty thing. Both companies reported last Tuesday.
Despite the sales increase, Tilray still increased operating expenses that doubled the loss in the third quarter to US $ 35.7 million (C $ 47.14 million) compared to US $ 18.7 million (C $ 24.69 million) ) the previous year.
Tilray shares went from US $ 21.57 to US $ 19.91, a decrease of 7.7%.
Tilray, Cronos Weekly price charts
With the Cronos Group, the effect of his report sent his stock of US $ 8.22 (C $ 10.86) to close yesterday at US $ 6.14 ( C $ 8.15), a 25.3% fall.
Cronos published an adjusted EBITDA loss of $ 23.9 million (C $ 18.1 million).
