Over the last few months, marijuana stocks have seen a shift in the market. These changes contribute to the high level of volatility. With many pot stocks working to expand their business, sometimes companies end up growing too fast to support a large demand. When a business assesses its finances and needs to reduce its costs, layoffs are usually the first step behind saving the company money. Often times, investors see this as a bad sign when searching for marijuana stocks to buy.
Though some have stated the opposite, arguing that these layoffs could be good for some pot stocks looking to grow in the long term. We have witnessed a large number of marijuana companies growing quicker than expected. With this comes the inevitable need to find ways to generate more capital for growth. With high expectations and the increased demand for more cannabis products, it seems as though the workforce within the cannabis industry may begin to rebuild itself. Either way, you look at it, layoffs are an interesting factor that is worth considering when looking for marijuana stocks to buy.
How Will Layoffs Affect This Pot Stock?
CannTrust Holdings (CTST Stock Report) is considered to be a major player amongst pot stocks. As a large grower of cannabis, many investors have viewed the company as a stronghold within the industry. Recently, the company came under fire for cultivating a large amount of cannabis that was grown without the proper license. This resulted in a loss of nearly $60 million worth of marijuana.
Since that time, the company has worked to regain some composure by implementing new cost-cutting measures. This includes laying off as many as 140 employees from its roster. The company also states that it wants to potentially rehire these workers by the time the end of 2020. However, this is solely dependent on the company’s ability to produce better results.
What Caused This Pot Stock to Cut Costs?
Tilray (TLRY Stock Report) is another big name pot stock that has felt the drop in the market. Over the last few months, the company has run into issues dealing with constant price swings. In the first few weeks of February, the company announced that it would be laying off as much as 10% of its workforce to help restructure the company. This is quite substantial and results in over 100 employees losing their jobs.
It seems as though the company may have changed its focus. As of now, Tilray is aiming its sights on the U.S. and Europe despite the burgeoning potential of the Canadian cannabis market. With so much uncertainty surrounding Tilray, the company is working toward better market performance heading into the future.
Aurora Cannabis: Will A New CEO Make A Difference?
Known as one of the original marijuana stocks to make it to the big boards. Aurora Cannabis Inc. (ACB Stock Report) is no stranger to the industry. With operations in 20 countries, Aurora has been trying to efficiently increase its market visibility despite facing there share of turmoil. Recently Aurora just liked the companies mentioned above have had to lay off 500 members of its team to cut cost. As well as Terry Boot stepping down as CEO and Michael Singer, the company’s executive chairman becoming the interim CEO.
Though all progress isn’t lost. For the last year, the company has had to go to great lengths to find new outlets for funding to try to make up for its losses. For example, Aurora decided to pause the construction of its newest cannabis cultivation compound, Aurora Sun. Recently, the company has announced they will not abandon the development of its Aurora Sun facility in Medicine Hat, Alberta. With this new development, Aurora has the potential to create over 600 new jobs.
The company is keen on completing the 1.6 million square feet facility with 6 grow rooms. With this space, the company has the ability to produce over 230,000 Kg of cannabis. However, only 238,000 square feet of the greenhouse may be operational sometime this year. Even though some of the bigger players in the cannabis industry are facing issues this does not mean all is lost for marijuana stocks. With some pot stocks catching more momentum only time will tell how the rest of the market will play out.
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