On Monday, March 30th, several large pot stocks released their latest earnings reports. Although it is a difficult time to rank any marijuana stocks, it is worth taking a look at these reports to see where some of the leading pot stocks are at. Both Cronos Group (NASDAQ:CRON) and HEXO (NYSE:HEXO) released their earnings on Monday, and both were met with some disdain from investors. In Canada, these two companies have suffered from the falling price of cannabis which has wreaked havoc on major marijuana producers. But, in the present day, we have seen the demand for cannabis rise sharply alongside the coronavirus, which could help to boost sales for the current quarter.
Despite the positivity that is increasing demand, many large Canadian pot stocks have stated that production will be slowed down by quite a large amount. This is simply another symptom of the worldwide effects of the coronavirus pandemic. For now, it is difficult to say what these numbers may mean for the future as everyone seems to be taking things day by day. But, both companies have been eagerly waiting to see their business model shifts take hold.
These two pot stocks both embarked on cost-saving measures recently. This includes laying off substantial amounts of staff as well as curbing production amounts. Because of this, the next quarter could be more telling about where these two pot stocks are headed. But for now, it’s worth taking a look at the numbers to see where these companies are at.
Cronos’ Earnings Report
Cronos Group (CRON Stock Report) represents the top tier of the cannabis industry. The company is arguably one of the largest pot stocks in the market and has stayed there for quite some time. In its latest earnings report, Cronos reported around $0.16 cents in earnings per share. Estimates showed a loss of around $0.04, which puts this at a solid advantage. The company’s sales were down from the previous quarter, netting around $7.3 million for the 3 month period. After it reported these numbers, it saw its stock drop by around 1%.
A lot of the recent volatility with Cronos Group can be attributed to the coronavirus, as it has wreaked havoc across markets beyond cannabis. Analyst Andrew Carter stated that “the sector continues to be volatile, and while we contend cannabis demand will prove to be robust amid its first real test, the industry is on shaky ground with COVID-19 likely to be a crushing blow.” As we continue to move throughout the next few weeks, investors should watch Cronos Group for a price rebound.
The Case for HEXO
HEXO Corp. (HEXO Stock Report) has also seen better days in its earnings report. The company states that it has seen “slower than expected retail store rollouts in Canada and delays in government approval for cannabis derivative products resulted in constrained distribution channels which have adversely affected overall market sales and profitability.” HEXOs report is arguably worse than Cronos, posting a net loss north of CA$290 million. Its net sales, however, did rise to around CA$17 million from around CA$13 million only a year prior.
Slow sales growth is another symptom of the Canadian legislation that backs the cannabis market. Despite this disappointing earnings report, on Tuesday, March 31st, HEXO Corp. shot up in value by around 6%. As we can see, many traders continue to trade off of fear and speculation and this case is no different. Moving forward, hopefully, we can begin to see some stability in pot stock pricing.
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