Despite all the excitement over cannabis stocks, the sector has generally traded flat since mid-September. My research has consistently shown that the industry can too easily add supplies to meet and actually far exceed market demand.
Since 9/15, sector stocks are generally mixed around breakeven with Aurora Cannabis (ACB) up slightly and Canopy Growth (CGC) down slightly. The other big players have traded more wildly with Cronos Group (CRON) inexplicably up over 100% while Tilray (TLRY) is down over 27%.
A prime example of the problems in the industry is a secondary cannabis company like Hexo (HEXO) that recently raised about $50 million at close to the highest stock prices. No lack of capital is a big problem. Not to mention, a new player like Zenabis that plans to go from limited cannabis production to ~500K kilograms by 2020.
The large numbers thrown out regarding market sizes is attracting far too many new players.
Below is my recent detailed coverage on cannabis stocks:
Aurora Cannabis - Aurora Cannabis: More Alarm Bells
Canopy Growth - Canopy Growth: Confusing Hype
Tilray - Tilray: Too Good Of A Deal?
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