CanadaStock NewsStocksCannabis Sector Freefall Didn’t Let up in September

Nearly all pot stocks have declined double digits since March as investors become wary of promises over results and in September the sector kept taking a beating.
Avatar David JOctober 1, 20199 min

As September came to a close, investors saw a dreadful month on the markets for cannabis stocks. Outside of two good months to start the year, 2019 has not been kind to the sector.

Here’s how some of the top pot stocks did this past month:

Stock % Change
Green Organic Dutchman -39.6%
CannTrust -35.2%
Aurora Cannabis -20.7%
Cronos Group -18.5%
Aphria -18.0%
Charlotte’s Web -16.4%
Horizons Marijuana Life Sciences ETF -15.8%
Tilray -3.6%
Canopy Growth -3.5%
Hexo -2.2%

There are some pretty large drops this month by some very notable companies.

Green Organic Dutchman (TSX:TGOD) got hammered when Aurora Cannabis Inc. (NYSE:ACB)(TSX:ACB) sold off its shares in the company which led to even more selling.

CannTrust Holdings (NYSE:CTST)(TSX:TRST) continued its freefall after Health Canada cracked down and suspended the companies cultivation and sales licences after numerous scandals have rocked the pot stock since early July.

Aurora, the second most valuable marijuana stock, itself fell more than 20 per cent due to a disappointing quarter that saw the company fall short of its own expectations for revenue.

Even a stock like Charlotte’s Web (TSX:CWEB), which is in the hemp business and has been able to produce good results wasn’t spared, falling more than 16 per cent.

It’s also telling when an ETF like the Horizons Marijuana Life Sciences (TSX:HMMJ) decline as much as 15.8 per cent. After all, the whole point of an ETF is to help give investors a bit more stability and so when an ETF crashes this badly, it’s clear that the industry as a whole has had a bad month.

What’s notable is that Tilray (NASDAQ:TLRY), Canopy Growth Corp. (NYSE:CGC)(TSX:WEED) and Hexo Corp. (NYSE:HEXO)(TSX:HEXO) saw some of the more smaller losses in September.

What all three have in common are some strategic deals with beverage giants. Canopy Growth, of course, has its is backed by with Constellation Brands (NYSE:STZ), while Tilray has its research partnership with Anheuser-Busch Inbev (NYSE:BUD), and Hexo is partnered with Molson Coors Canada (TSX:TAP.B).

It could be that investors were a little less bearish on those stocks given the anticipation of some new products expected to be unveiled later this year in Canada that could generate some excitement.

Will cannabis stocks recover in October?

October 17 marks the one-year mark since the Canadian recreational market opened for business. But unfortunately, there’s little reason to expect that things will improve anytime soon.

The markets have shown a lot of apprehension lately with investors turning away from growth stocks in favour of more stable, value-oriented investments. And that’s bad news for the cannabis industry where profits have been hard to come by and potential has be their main selling feature.

One stock that could get a boost this month is Aphria Inc. (NYSE:APHA)(TSX:APHA), which is expected to release its quarterly results in early-to-mid October. The Ontario pot producer has been a rare major player to have turn in profit in its last quarter.

Meanwhile, Quebec-based Hexo hasn’t announced a date when its earnings will be released, but based on previous years, it’s likely going to be towards the end of October or early November.

If those two stocks can produce some good results, it could help bring some optimism back to the industry. But if that doesn’t happen, then at least for bargain hunters, the good news is there could be some good buys out there if cannabis stocks continue falling at these rates.

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