Canada’s Top 10 Cannabis Shares Down an Average 57 Per Cent – LPC
With Canada’s top 10 cannabis shares down an average 57 per cent, you wouldn’t think there’d be much optimism. But in fact, some are seeing opportunities in Canada and abroad. Many analysts believe what the market is seeing is the end of the heady days and the retail investor.
“A psychological shift has take place from everyone wanting to own (cannabis) to everyone involved now feeling burned. I think many investors are now over it,” said Chris Kerlow, a portfolio manager at Richardson GMP. The excitement, he said, is unlikely to return.
He indicated that it was inevitable that we’d see cannabis shares down at some point. Market values for the cannabis industry were at about the same level as grocery stores.
“What that’s telling us is in the future, people are going to be buying more cannabis than groceries. That’s obviously not going to happen,” he said.
Six of the Top 10 have lost half their value or more, though most of the industry have seen their cannabis shares down. Tilray lost $14 billion in market cap and Aurora almost $7 billion. Cronos gained market cap but lost share price. CannTrust lost the most of course due to its product licence suspension.
Where is the Hope? – LPC
These changes mean that cannabis stocks will trade on fundamentals, not excitement. That could keep cannabis shares down still. Tilray CEO Brendan Kennedy said that cannabis profit chasing is “constraining” in this time of growth. Bruce Linton was fired from Canopy Growth for what many believe to be a lack of profits. So, although the larger companies will feel the pressure to become profitable sooner, some may look at long-term growth instead.
Smaller companies could be the key. Analysts mentioned a handful of companies including OrganiGram Holdings, MediPharm Labs, Hexo Corp., and Supreme Cannabis. Many serious investors are also looking to the US for opportunities.
Like all rushes, the green rush seems to be over – in Canada at least. Depending how things play out south of the border, we could see another one in the US. We’ll also likely see more consolidation as time goes on.
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