Why Cannabis Stocks Were Trading Lower Today


Jan. 3 2020, Published 3:39 p.m. ET

On the back of the weakness in the broader equity market, the cannabis sector was trading in the red today. Today, CNBC reported that the killing of Iran’s top military commander in an airstrike heightened geopolitical tensions and drove oil prices higher. These concerns could have caused the US markets to trade in the red.

At 1:28 PM ET, the S&P 500 Index was down by 0.4%. Meanwhile, the ETFMG Alternative Harvest ETF (MJ) was trading 1% lower at that time. The Horizons Marijuana Life Sciences Index ETF (HMMJ) was also down by 1.1% at 1:13 PM ET. Let’s look at the cannabis stocks that are in the news today.

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Curaleaf completes its acquisition of Acres

Today, Curaleaf Holdings (CURLF) announced that it closed the acquisition of Acres Cannabis. Acres Cannabis’s assets included a flagship dispensary in Las Vegas and another dispensary in Ely, Nevada. After the acquisition, Curaleaf operated two cultivation sites, two processing sites, and two dispensaries in Las Vegas. The company also expects to open a retail location in Ely in the second quarter of 2020.

Today, the company was trading 0.5% higher at 1:06 PM ET. Last year, Curaleaf was one of the few cannabis companies to deliver positive returns. It had returned 26.6%. 

HEXO closes direct offering

Yesterday, HEXO (HEXO) closed its previously announced registered direct offering. The company sold 14,970,062 common shares at a stock price of $1.67, which provided the company with proceeds of approximately $25 million. The company also offered warrants to purchase 7,485,032 common shares at an excise price of $2.45 in a five-year term.

Today, the company was trading 4.2% lower at 1:14 PM ET. Last year, the company had lost 56.1% of its stock value. The lower-than-expected performance in the previous two quarters, withdrawal of its fiscal 2020 guidance, and the abrupt resignations of its CFO caused the company’s stock to fall last year.

Aphria is Jefferies’ top pick in the cannabis space

Yesterday, Schaeffer’s Investment Research reported that Jefferies had selected Aphria (APHA) as its top pick in the cannabis space. Jefferies was impressed by Aphria’s strong medical marijuana business in Canada, its branding in the adult-use cannabis market, and the US potential.

The investment bank also increased its price target from $8.30 to $8.40. Aphria reported impressive performance in the last two quarters by posting positive EBITDA. Only a few cannabis companies have managed to become profitable so far.

However, the weakness in the cannabis sector appears to have led the company’s stock to fall 13.6%. Today, the company was trading 1.1% lower at 1:15 PM ET.

For more marijuana-related news and update, visit 420 Investor Daily.


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