Big cannabis companies still seeing a retreat in stocks

Many cannabis companies rushed to the stock exchanges, whether in the U.S. (New York Stock Exchange, Nasdaq) or Canada (TSXV), but most of them had to and still have to make do with OTC trading for the time being.

Only a few cannabis producers have managed to quickly engage with companies active in other consumer-related sectors. An outstanding example in this regard is the Canopy Growth Corporation (CGC), formerly known as Tweed.

The company has been listed on the NYSE since May 2018 and benefited from a 10% stake in Constellation Brands in 2017, and later from another $4 billion investment.

Canopy is also the largest Canadian cannabis company with a capitalization of around $6 billion. By mid-October, however, it was still around $10 billion. Some observers nevertheless expect that Canopy will benefit greatly via Constellation’s distribution network in the U.S. as soon as there is a nationwide liberalization.

You can find more information about this industry and other important news in the cannabis sector in the Hemp.im app. This app collects the latest cannabis investing news in bite-sized chunks that are easy to digest.

Big cannabis companies face problematic profit development

Canopy has displaced Tilray from the first position. This company had the largest capitalization until September last year but stuttered following its IPO in the summer.

Other notable players in the cannabis industry are Aurora Cannabis, which has grown through acquisitions, with a reduced capitalization of around $2.8 billion and Aphria, which has a capitalization of around $1.1 billion and works with the Canadian pharmacy chain Shoppers Drug Mart.

The Cronos Group produces for itself, but at the same time invests in other cannabis producers. The Hexo Group is the first cannabis company in Quebec, while CannTrust Holdings has only been listed on the NYSE since February 2019.

According to Investopedia, the group of the first ten significant cannabis companies also includes Namaste Technologies, OrganiGram Holding and Emerald Health Therapeutics.

A disaster for investors, but a win overall

The biggest problem with most of these cannabis companies is the fact that they usually have zero or only small profits or growing losses.

The price trends clearly reflect this fact, as they all suffered annual losses of between 17% and 86% by mid-October 2019.

According to an analysis by the daily newspaper, “Globe and Mail,” on the anniversary of legalization, the price losses of all companies averaged at least 50%. The authors of this report regarded this as a veritable disaster for investors.

The Canadian cannabis index fell from its high of 972 points in January 2018 to 211 points on Nov. 17, 2019.

The aim of cannabis legalization was not to help cannabis companies financially. Rather, it was a matter of pushing back the black market, offering potential customers cheap cannabis, at best creating new tax revenues and thus reducing the pressure on the police and other authorities.

__

(Featured image by Austin Distel via Unsplash)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Hemp.im, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in Neue Burcher Zeitung, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Hemp.im assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Hemp.im is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.