Cronos Group (CRON) slipped 2.87% on Friday, adding to a downtrend that began on February 17th.
The Canadian medical marijuana and cannabis oil maker and distributor closed at $ 10.45 on Friday.
Friday’s decline followed a 31 cents per share loss in the fourth quarter, which fell well short of analysts’ expectations of a loss of $ 0.04 per share.
Cronos has been in a downtrend since February 11th
In one bright spot, revenue was better than expected at $ 17 billion, up 133% year over year.
In the company’s earnings call, CFO Jerry Barbato said fourth quarter sales were driven by “growth in Canada’s adult cannabis market, sales in Israeli medical market, and growth in our US hemp-derived CBD business …”.
However, this growth was “partially offset by one-off wholesale sales in the Canadian market in the fourth quarter of 2019 and strategic price reductions for various adult cannabis products in Canada in the fourth quarter of 2020”.
The company noted that gross margins are likely to fluctuate in the future.
The company announced potentially more optimistic news.
The Happy Dance CBD product line launched with actor Kristen Bell is sold in ULTA (ULTA) beauty stores.
In addition, the company’s Israeli unit received regulatory approval to market various cannabis products in that country.
As a group, cannabis stocks rebounded on February 10, when Senate majority leader Chuck Schumer, along with other Democratic senators, pushed for federal marijuana reform.
Ideas discussed in Congress include law enforcement reform and banking reform.
Just as the various cannabis stocks were moving together on this news, they fell as a group on Cronos’ quarterly report.
Canadian producer Tilray (TLRY) pulled back 0.57% to close at $ 24.36.
Tilray, which will merge with Aphria in the second quarter of 2021, was down 0.57% on Friday.
Tilray will merge with another Canadian medical marijuana company, Aphria (APHA).
In the transaction, Aphria stockholders will receive 0.8381 Tilray shares for every Aphria share they own.
Aphria also closed the session lower on Friday, down 2.09% to end at $ 17.84.
The marijuana industry is rapidly developing after it got into a loop due to pandemic closings in 2020. However, optimism about the outlook for 2021 and beyond could bode well for investors.
However, as with any investment, it is wise to be aware of potential pitfalls.
The cannabis industry is still young. New industries with companies that have only gone public in recent years are often ripe for big profits.
However, many cannabis stocks are small caps and can be prone to volatility. In addition, these companies are unusually prone to regulatory risk.
As always, be aware how cannabis stocks fit into your broader investment and asset allocation strategy, and never risk your capital with an oversized position in a single stock or industry.