Shares of Cronos Group (NASDAQ: CRON) in Canadian cannabis producer, is sliding after several analysts issued downgrades in response to yesterday's earnings call. Investors say that Canada's government-run cannabis program is not going to have the stock 12.5% lower this morning, and it has lost 9.1% or 2:26 p.m. EDT on Wednesday
Several analysts, including Canaccord's Matt Bromley, downgraded Cronos Group after the company reported uninspiring results during the last three months of 2018. Compared to its peers, Cronos really didn't do too badly .
Cronos was the first licensed cannabis producer to list its shares on a major U.S. stock exchange, but now it's the smallest by sales. Revenue rose 49% from the previous quarter to just 5.6 million Canadian dollars
That's not enough to cover expenses, and operations lost CA $ 21.5 million, an unacceptable 137% or revenue recorded during the fourth quarter.
Statistics Canada reported total sales of licensed cannabis in January were lower than a month earlier. If February's sales figures are better than January's, Cronos Group and its peers could be in a lot of trouble.
International sales aren't significant enough to mention yet which means Cronos is depending on its domestic market to finds operations through the next few years without asking investors for another handout. That's going to be a problem, because the domestic market reached an annualized CA $ 1.2 billion in the fourth quarter, and it doesn't seem to be getting much larger. Remember, Cronos needs to share with half a dozen larger licensed producers plus at least one hundred smaller ones.
Somehow, Cronos Group has set a $ 3.3 billion market cap. Unless another company like Altria or Constellation Brands makes an irrational decision and starts throwing money at Cronos. -jssdk ',' //connect.facebook.net/en_US/sdk.js#xfbml=1&version=v2.3 ', true);
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