Why Cannabis Stocks Are Trading in the Red Today



Driven by weakness in the US equity market, the cannabis sector was down today. Today, CNBC reported that the nonfarm payrolls increased by 145,000 against analysts’ expectations of 160,000. Also, payrolls grew by 2.9%, which is below analysts’ estimate of 3.1%.

The lower-than-expected payroll and wage growth in December caused the Dow Jones Industrial Average to fall. Today, at 1:15 PM ET, the DJIA was trading 0.2% lower.

Meanwhile, the ETFMG Alternative Harvest ETF (NYSE:MJ) was trading 1.4% lower at 1:15 PM ET. The Horizons Marijuana Life Sciences Index ETF (TSE:HMMJ) was also down by 1.4% at 12:55 PM ET. Let’s look at the cannabis stocks in the news.

Aurora Cannabis falls over 9%

Yesterday, MarketWatch reported that Piper Sandler downgraded Aurora Cannabis (NYSE:ACB) from “hold” to “sell.” The firm cited a weakening cash position and European Union sales. It also lowered its price target from $3 to $1. For more, please read Aurora Cannabis Gets a Price Target of $1. Piper Sandler’s downgrade appears to have led the company’s stock to fall. Today, at 1:00 PM ET, ACB was trading 9.1% lower.

Organigram named one of the top 100 employers

Today, Organigram Holdings (NASDAQ:OGI) announced that the editors of Canada’s Top 100 Employers had selected it as one of Atlantic Canada’s top employers. These employers were assessed based on a variety of criteria. The company currently has 800 full-time employees.

Today, OGI stock was trading 2.9% lower at 12:57 PM ET. The weakness in the cannabis sector appears to have dragged the stock down. The company plans to report its first quarter of fiscal 2020 earnings on January 14. For analysts’ forecasts, read OrganiGram’s First-Quarter Earnings: What to Expect.

Planet 13 provides an update on its 2019 performance

Yesterday, Planet 13 Holdings announced that it served about 695,000 customers in 2019, with an average ticket size of $90. Further, the company noted that it generated unaudited revenue of approximately $63 million for 2019. Its unaudited gross margin was 57% for 2019.

For the fourth quarter of 2018, the company’s gross margin was 50%. However, the unaudited gross margin for the fourth quarter of 2019 was 56%–59%. In December, the company served an average of 1,757 customers per day, with an average ticket size of $100. Today, Planet 13 was trading 2.1% higher at 12:54 PM ET.

HEXO and CRON fell today

Driven by the weakness in the cannabis sector, HEXO (TSE:HEXO) and Cronos Group were trading in the red today. At 1:01 PM ET, HEXO and Cronos Group stock traded 5.4% and 3.9% lower, respectively.

HEXO is going through a tough phase. Since the beginning of 2019, the company has lost 58.8% of its stock value as of January 9. The weak performance in the last quarter, withdrawal of its fiscal 2020 guidance, and the abrupt resignation of its CFO led to a fall in HEXO’s stock price.

Cronos Group stock has lost 36.0% of its value during the same period. Its weak performance in all three quarters of this fiscal year led to a fall in its stock price.

For more cannabis-related news and updates, visit 420 Investor Daily.

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