Cronos Stock (TSE:CRON)(NASDAQ:CRON) stock fell 9.22% on January 24, marking its steepest decline so far in 2020. The stock plunge followed an important disclosure that you would only expect from a company that is trying to be straight and transparent with investors. Here’s what happened.
On January 22, after market close, Cronos made a regulatory filing detailing changes in its executive team. In that SEC filing, Cronos revealed that David Hsu and William Hilson have stepped down as its chief operating officer and chief commercial officer, respectively. Unfortunately, some investors read bad news in the executive exits and sold their shares in Cronos.
But a careful reading of the filing doesn’t seem to raise any red flags. Therefore, the big stock plunged points to investors panicking to the degree of responding to a mosquito bite with a missile.
There is no doubt that 2019 was a difficult year for cannabis stocks and Cronos Stock is no exception. But before the uncalled for reaction to Cronos’s regulatory filing, we had been at a point where sellers were starting to give way to buyers in Cronos stock. The stock has gained about 8.0% in the past one month. It had gained more than 13% year-to-date before the January 24 big selloff.
About Cronos Stock
Cronos Stock is a Canada-based global cannabis company. Cronos operates through subsidiaries and serves both medical and adult-use cannabis markets. The company has cannabis production and distribution across five continents. Noteworthy, Cronos is one of the world’s biggest cannabis companies.
Investors have started flocking to Cronos stock early on in 2020 as they start to realize how well the company has positioned itself to capitalize on the expanding cannabis market. Here are some of the positives in Cronos.
Cronos boasts a strong war chest
Last year, tobacco giants Altria Group (NYSE:MO) made a huge investment in Cronos. It injected $1.8 billion into the business in exchange for a 45% equity stake. That deal put a significant amount of cash into the hands of Cronos, thereby giving it more room to continue investing in developing its business. Cronos is already putting the money to work with ongoing capacity expansion and strategic acquisitions. Cronos is developing a new cannabis facility in Israel and recently completed the acquisition of US hemp products business Redwood.
Cronos still has more cash to invest in increasing shareholder value. The company finished the third quarter with a cool $1.5 billion in cash reserve.
Cronos to leverage Altria’s distribution network in the US for its new CBD brand. In November, Cronos expanded its product portfolio with the launch of PEACE+, a new hemp-based CBD brand. Cronos said it will use Altria’s sales and distribution network in the US in a test market launch for PEACE+. The collaboration with Altria for the sale of PEACE+ goes on to demonstrate that there are a lot of benefits beyond the cash injection that Cronos stands to gain from having Altria as one of its investors.
Cronos’s revenue soared 238% year-over-year in the third quarter of 2019.
Cronos extends its US market reach with Redwood acquisition
Cronos has completed the acquisition of Redwood Holding Group, a successful hemp-CBD products company that serves the US market.
The transaction adds to Cronos’s portfolio a list of innovative hemp-based CBD consumer products sold under the Lord Jones brand. During the third quarter of 2019, Redwood launched several new Lord Jones brand products aimed at the cosmetic and personal care market. One of those products, Lord Jones + Tamara cream, was launched in collaboration with the luxury shoe brand Tamara Mellon. Lord Jones + Tamara cream is for foot application.
In addition to expanding Cronos’s product portfolio, the Redwood deal also extends Cronos’s reach in the US cannabis market.
Cronos extends footprint in Canada’s expanded cannabis market
Cronos is growing its footprint in Canada to take full advantage of Canada’s recently expanded cannabis market. Cronos is launched adult-use cannabis products distribution operations in the province of Alberta. That means that Cronos now has adult-use cannabis products distribution footprint in six Canadian provinces, which together represent about 70% of the country’s population, thereby giving itself significant market exposure.
The launch of distribution operation in Alberta comes on the back of Canada’s approval of the sale of new cannabis products, from cannabis-fused edibles and drinks to cannabis smoking devices or vapes. The sale of the newly approved adult-use cannabis products kicked off in December is expected to greatly expand the revenue opportunity for companies like Cronos. As we discussed here previously, Canada’s adult-use cannabis market is on track to double this year C$2.4 billion thanks to the newly approved products.
Cronos Australia successfully completes its IPO
Cronos Australia, a joint venture cannabis business operating in Australia and in which Cronos owns a 31% stake, has successfully completed its initial public offering (IPO). According to Cronos, the Cronos Australia IPO allows it to continue participating in the joint venture’s growth as it works on becoming the leading medical cannabis company in the Asia-Pacific region.
Cronos Australia will import Cronos’s PEACE NATURALS brand products for sale in Australia. Australia is shaping up as one of the bright spots for cannabis companies. Australia’s medical cannabis market was valued at $17.7 million in 2018 and is forecast to top $3.0 million by 2028. The Australia cannabis market opportunity would be even bigger with the addition of adult-use products. All that means tremendous opportunity for Cronos and a promising future for its shareholders.
Considering how Cronos Stock has positioned itself in the global cannabis market, there is will no doubt the stock will recover from the latest shock. For investors looking for cannabis stocks poised to impress in 2020, the latest plunge has opened an opportunity to enter Cronos stock at a steep discount.
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Disclosure: We have no position in Cronos Stock and have not been compensated for this article.
Forget APHA and ACB, Buy GTBIF and TCNNF
There are a lot of misconceptions going on when it comes to US legalization. Many investors are buying Aphria (APHA) and Aurora Cannabis (ACB) hoping to bank on what’s happening in the US. However, they are Canadian Licensed Producers and have no business in the US. Investors are buying them because they trade on the major exchanges, but that is the wrong move. The correct move is to buy the US multi-state operators like Green Thumb Industries (GTBIF) and Trulieve Cannabis (TCNNF).
On Election Day voters in New Jersey, Arizona, Montana and South Dakota voted to legalize recreational marijuana. South Dakota and Mississippi voters also approved measures to legalize medical marijuana.
There’s also the prospect of a more pot-friendly White House with President-elect Joe Biden. Vice Presidential Candidate Kamala Harris said at the debate a Biden administration would decriminalize marijuana at a federal level and expunge criminal records of people with marijuana-related offenses.
Green Thumb Industries Inc. (“Green Thumb”), a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while giving back to the communities in which it serves.
Green Thumb manufactures and distributes a portfolio of branded cannabis products including Beboe, Dogwalkers, Dr. Solomon’s, incredibles, Rythm and The Feel Collection.
The company also owns and operates rapidly growing national retail cannabis stores called Rise™ and Essence. Headquartered in Chicago, Illinois, Green Thumb has 13 manufacturing facilities, licenses for 96…
What Do Investors See In Medical Marijuana Stock (OTCMKTS:MJNA)?
Medical Marijuana Stock (OTCMKTS:MJNA) has emerged as one of many investor’s favorite pot stocks in the legal cannabis universe in 2020. The stock is already up about 10% in 2020, demonstrating how investors have warmed up to the stock early on in the New Year.
Following a disastrous 2019, cannabis investors lost money but have also learned that their best bets are stocks with strong fundamentals. They are looking for companies that have positioned themselves well in the cannabis industry and have what it takes to go for the opportunities. That is why MJNA stock is catching a lot of investor attention in 2020 because of how it has positioned itself in the cannabis market.
Robust revenue growth and strong financial position have also helped put MJNA on the radar of investors hunting for quality cannabis stocks. Revenue at MJNA more than doubled from $26.5 million in 2017 to $60 million in 2018. MJNA is also not in financial distress as may be the case with other cannabis companies out there. The company finished the third quarter, the most recent reported period, with $5.5 million in cash reserves.
Moreover, MJNA has recently taken steps to expand into new international markets and invest in companies that are leaders in their segments. These prudent actions are helping lift Medical Marijuana stock as more investors learn about them.
About Medical Marijuana stock
Is Tilray Inc (NASDAQ:TLRY) A Buy Or Sell?
For Tilray Inc (NASDAQ:TLRY) and the rest of cannabis stocks, 2019 was no doubt a bad year. But 2020 is shaping up to be a promising year for the stock. To start with, Tilray stock has already gained 8.35% year-to-date. If that says anything, it shows following the broad selloff in Tilray stock last year, we’ve got to a point where sellers are giving way to buyers in the stock.
There are several catalysts that should continue driving NASDAQ:TLRY as you’re about to see. First, below is a brief profile of the company we’re discussing.
Tilray is a Canada-headquartered global cannabis company. It is engaged in activities of cannabis cultivation and processing as well as marketing and distribution of cannabis products. Tilray already has several cannabis products brands to its portfolio. It operates across five continents through subsidiaries in Canada, Australia, Germany, and Portugal.
Following the broad collapse of cannabis stocks in 2019, investors are looking for cannabis stocks that can make a positive impact on their portfolios in 2020. Tilray stands out as an attractive cannabis stock pick in 2020. Here are some of the exciting things about the company.
Tilray CEO sees a bright future for the cannabis industry
On January 25, Tilray CEO Brendan Kennedy spoke on Bloomberg. In that interview, Kennedy framed a rosy outlook for the…