Why Cannabis Stocks Are Falling Today


Jan. 7 2020, Updated 3:34 p.m. ET

The weakness in cannabis stocks continued today, marking the fourth straight day of decline. At 1:08 PM ET, the ETFMG Alternative Harvest ETF (MJ) was trading 0.8% lower, while the Horizons Marijuana Life Sciences Index ETF (HMMJ) was down by 1.7% at 12:54 PM ET.

The broad US equity market also fell today due to the growing tension between the US and Iran. At 1:11 PM ET, the S&P 500 Index was down by 0.2%, while the Dow Jones Industrial Average was trading 0.4% lower. Let’s look at the marijuana stocks that are in the news today.

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GGB provides an update on its holiday sales

Today, Green Growth Brands (GGB) announced that between November 27 and December 28, its Seventh Sense Botanical processed 128,000 transactions. It also announced that the Seventh Sense customer database grew by 42% during the same period.

The company announced that it operated 195 Seventh Sense shops in 35 states as of December 28. GGB added that its two The+Source dispensaries processed more than 62,000 transactions between November 27 and December 28. However, it appears that the announcement failed to impress investors. At 12:31 PM ET, the stock was trading 2.7% lower.

OGI receives a price cut ahead of its first-quarter earnings

Organigram Holdings (OGI) plans to report its earnings for Q1 of fiscal 2020 on January 14. Ahead of OGI’s first-quarter earnings, Haywood Securities lowered its price target from 7.50 Canadian dollars to 6.50 Canadian dollars on January 6. On January 2, Jefferies cut its price target from 8.20 Canadian dollars to 5.00 Canadian dollars. Today at 12:57 PM ET, OGI was trading 3.6% lower.

For the quarter, analysts expect the company to report revenues of 20.9 million Canadian dollars, which represents a YoY rise of 67.6%. However, they expect the company to report EBITDA of -0.40 million Canadian dollars during the quarter.

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MKM Partners expects significant writedowns from Aurora Cannabis

Yesterday, the Financial Post reported that a 22-acre greenhouse on Exeter’s Airport Line was listed on Cushman & Wakefield’s website. The article added that Aurora Cannabis (ACB) had obtained the property as part of its $3.2 billion acquisition of MedReleaf in July 2018. With respect to the listing, Bill Kirk of MKM Partners stated, “This listing, for 75 per cent of former MedReleaf’s capacity, signals major writedowns ahead.”

Kirk continued, “We are also discouraged with the visibility of Aurora’s strategy — investors were unaware Aurora was trying to sell Exeter.” Yesterday, Aurora Cannabis stock declined by 5.4%. Today, the company was trading 1.6% lower at 12:55 PM ET.

CannTrust falls more than 11%

Today, CannTrust Holdings (CTST) was trading 11.1% lower at 12:53 PM ET. From the beginning of 2019 to January 6, 2020, the company has lost 76.7% of its stock value. The non-compilation issues with Health Canada and subsequent suspension of its cultivation led to a fall in the company’s stock price. For more cannabis news, please visit 420 Investor Daily.


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