It is possible that the calendar year is ending. Or perhaps it is the recent volatile friction of stock prices in the cannabis sector that makes market viewers wonder aloud about the future of pot shares. In the wild world of weed, however, there are more questions than answers.
In the past two weeks, stock prices fell practically in the sector after the earnings results of some of the largest companies had reached one disappointing note after another, creating a daunting crescendo among investors who are still hopeful about viability long-term industry. Then, early in the middle of last week, the market came back, with many companies seeing double-digit stocks recovering.
Canopy Growth Corp (NYSE :), (TSX: , TSX :)), Aurora Cannabis Inc (NYSE :), (TSX 🙂 and Aphria Inc (NYSE :), (TSX 🙂 sent the first blimps in the charts, which claimed the title of the three best artists on the Toronto Stock Exchange last Wednesday. Canopy was more than 16% higher on the day, Aurora won 12.5% ??and Aphria added just over 5.5%.
Canopy, Aurora, Aphria Weekly Price Charts
On Thursday, Hexo Corp. (NYSE :), (TSX 🙂 had joined the rebounders, with an impressive gain of more than 35% on the day, followed by Aurora and Canopy with another 19% and 16%, respectively , to the upward swings of their previous day.
But by the time Friday rolled around, the swings went in the opposite direction. Hexo fell more than 15.5% on the day, Aurora lost 13% and Canopy shaved just over 9% from the previous closing.
Volatility based on headlines
This recent volatility can be attributed to the response to headings, which explains their short impact span. In the US, news from the Lower House Judicial Committee that approved a bill that would legalize marijuana at federal level was largely responsible for the rise in stock prices.
This coincided with the provincial government in Ontario who announced that it would renew how pot licenses are issued for the retail trade. But neither news comes with immediate change. There is still no clear timeline for federal legalization in the US and regulatory changes for stores in Canada's most densely populated province will not be effectively implemented until the second half of 2020.
The benefits were fed back as soon as reality pulled a dent in optimism. Canopy closed 0.22% in New York yesterday to end at US $ 18.45, while 0.12% was achieved on the Toronto Stock Exchange to end the day at C $ 24.50. Aurora lost more than 6% yesterday to end at US $ 2.52 (C $ 3.35), Aphria lost 2.36% on Monday to end the day at US $ 4.56 in New York and fell 1.45 % on the TSX that closed at C $ 6.10, while Hexo just finished less than 2% against US $ 2.19 in New York and an increase of 2.8% in Toronto against C $ 2.93.
Two American marijuana companies set up profitable quarters
While Canada-based cannabis companies deal with the constant ups and downs, American companies show that profitability is not that elusive south of the border.
Last week that case made the Florida headquarters, Trulieve Cannabis Corp (OTC 🙂 and Massachusetts-based Curaleaf Holdings Inc (OTC :). Both reported better-than-expected quarterly results
Trulieve, a medicinal cannabis grower with a market capitalization of US $ 1.32 billion, wants to operate 44 stores in Florida by the end of next month. It reported the third quarter of US $ 70.7 million, above the expected figure of US $ 65.6 million. Turnover increased by 22% compared to the previous quarter. The company also repeated its 2019 guidelines of US $ 220 million and predicted US $ 220-240 million.
Trulieve shares closed yesterday at US $ 11.99 (C $ 15.88). It is an increase of 9.94% in the past year.
Trulieve, Curaleaf Weekly price lists
At Curaleaf, revenue growth caused the multi-state operator to achieve a total increase of 27%. Adjusted EBITDA amounted to US $ 9 million, compared to a loss of US $ 3.2 million in the corresponding quarter last year. Curaleaf has a footprint in 12 states, operates 50 pharmacies and operates 14 growing locations and 13 processing centers.
Curaleaf Shares closed at US $ 5.98 (C $ 7.96) on Monday, a drop of more than 2.75% on the day.
The production of canopy drinks begins
Canopy Growth started producing cannabis-infused drinks yesterday. The announcement came after the company obtained its operational and secure storage license from Health Canada for a 150,000 square meter facility at its headquarters in Smith Falls, Ont.
Canopy will produce 11 drinks in what it calls its "first wave of production." Extra drinks will be rolled out in the coming months. The new products are expected to be shipped by Canada within a few weeks
The shares of Canopy fell by nearly 10% last Friday after Constellation (NYSE 🙂 revealed in a regulated application that it is not going to make extra cash injections into the weed company. According to the filing, the beer maker said Canopy sufficiently capitalized with just over C $ 2.7 billion ($ 2.03 billion) in cash and tradable securities as of September 30.
In August 2018, the brewer, which markets brands including Corona, invested US $ 4 billion (C $ 5 billion) in Canopy and acquired a 38% stake in the company. In June this year, it made public its dissatisfaction with the performance of the marijuana grower. Within a few days, the founder and CEO of Canopy, Bruce Linton, was expelled.
