Cannabis Sector: Week Ended October 24 in Review


Oct. 25 2019, Published 3:56 p.m. ET

The cannabis sector saw a small rally in the week that ended on October 24. The ETFMG Alternative Harvest ETF (MJ) and the Cambria Cannabis ETF (TOKE) rose 1.94% and 1.72%, respectively, in the week.

Prominent cannabis players Tilray (TLRY), Canopy Growth (CGC), Cronos Group (CRON), and Aphria (APHA) rose 8.40%, 4.34%, 2.71%, and 4.26%, respectively, in the week. Aurora Cannabis (ACB) was the exception, falling 4.37%. Cannabis stocks seem to be benefiting the most from the improvement in the broader market sentiment. Cannabis 2.0 legalization, which came into effect on October 17, likely also contributed to the rally.

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How the broader market performed

The overall market sentiment in the US seems to have improved slightly. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500, closed 0.36% higher in the week that ended on October 24. The S&P 500 Index rose 0.41%. The Dow Jones Industrial Average was down 0.81%, or 220.35 points. The Nasdaq Composite Index rose 0.35%.

Investors now seem to be hopeful about a partial trade deal between the US and China. The US market is also expecting better terms given that China’s economy has slowed considerably. As reported by CNBC, today, the Office of the US Trade Representative said that there had been progression in US-China trade discussions. According to the representative, the countries are now close to finalizing parts of the first phase of the deal. This news has improved the overall market sentiment and is pushing up most major US indexes today.

Top performers in the cannabis sector

The chart above shows how 14 cannabis stocks and six marijuana ETFs performed in the week that ended on October 24. KushCo Holdings (KSHB) emerged as the biggest gainer, with a weekly rise of 20.21%. After plunging to a low of $1.29, the stock seems to be recovering ahead of its fourth-quarter earnings results.

Tilray also reported a weekly return of 8.40% and closed at $24.38 on October 24. Its shares jumped after it reported the import of medical cannabis from Canada to the US to support a clinical trial. The company announced that this trial would evaluate the efficacy of medical cannabis for the treatment of taxane-induced peripheral neuropathy in breast cancer patients.

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On October 24, Aphria (APHA) closed at 6.71 Canadian dollars, implying a weekly return of 4.03%. Since it reported mixed first-quarter earnings results on October 15, the stock has traded in the range of 6.25 Canadian dollars–6.75 Canadian dollars. Today, however, the stock is already up 7.60% and is trading close to 7.22 Canadian dollars.

Canopy Growth (CGC) reported a weekly return of 3.77% and closed at 28.34 Canadian dollars on October 24. The stock started its upward trend post-October 21. On October 21, the company reported the expansion of its medical marijuana business in the United Kingdom and Luxembourg.

Underperformers in the cannabis sector

HEXO Corporation (HEXO) continued to be the worst performer in the week that ended on October 24. The stock lost 13.12% in the week and ended up at 3.31 Canadian dollars. The already-struggling stock crashed after the company announced that it had reduced its workforce by 200 to cut down on costs.

Supreme Cannabis lost 10.87% in the week and closed at 0.82 Canadian dollars on October 24. Emerald Health’s share price also fell 8% in the week and closed at 0.92 Canadian dollars.


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