While earnings season has been in the news, capturing investors’ attention as much of the broader stock market reported, the earnings season for Cannabis stocks is in full swing as well.
Aurora and Cronos, Canadian licensed cannabis producers, reported earnings last week. Cronos was up 52% on revenue after promising results for multiple quarters, although the company has still yet to show a profit. Aurora expects a higher 500% higher revenue as well, but similarly still has yet to be profitable. Tilray and Canopy report this week. Canopy has a new CEO and should have a lot of news to be communicated to investors.
Despite the lack of profitability that Cannabis stocks have shown on a balance sheet, there is some benefit to using pot stocks for diversification, at least recently. For example, just last Friday and continuing Monday, amidst the extreme volatility that markets have been experiencing, cannabis stocks such as Canopy Growth Crop (CGC) were actually outperforming the overall stock market.
In addition, GW Pharma, the British bio-pharmaceutical company known for its multiple sclerosis treatment product nabiximols, which was the first natural cannabis plant derivative to gain market approval in any country came out to give support to the cannabis industry; Aphria last week helped to boost the market as well.
Some experts are optimistic that this rise could signify a potential trend developing in the cannabis stocks.
“It’s the good news here,” said Tim Seymour from CNBC and the Amplify Seymour Cannabis ETF (CNBS) in a podcast. “I’m not gonna tell you we’re gonna be a non-correlated asset class. But I’m gonna tell you that the bottom up performance of companies right now is gonna start to be a bigger dynamic than just overall people saying it’s risk-off, it’s risk-on, risk-off for Cannabis,” he added.
Finally, there is some indication from the Department of Justice that some of the impending deals might actually go through, according to Seymour. He claims the HSR Act is what’s holding up M&A transactions from going through, which if closed, are good news for the cannabis sector and related ETFs.
Click here to listen to Seymour’s full podcast episode here.