Cannabis Stocks Weekly Recap

This week was another positive week for cannabis stocks. We saw the rally continue as stock markets pushed ahead on optimism over the economy reopening.  The pure-play marijuana fund ETFMG Alternative Harvest ETF (MJ) ended with a gain of about 2%.

Aurora Cannabis (ACB) continues to slide 

It was another tough week on the markets for Aurora Cannabis (ACB) as the stock continued to lose momentum. Since it’s knockout quarter and the recent acquisition of Reliva for 40 million the stock has been cooling off from recent highs. ACB Is now down almost 20% but we did receive some encouraging news this week. ACB sold its entire stake in Alberta liquor retailer Alcanna for proceeds of $27.6 million. We anticipate that these funds will be used towards the purchase of Reliva. In our opinion, the sale falls in line with their constant restricting and business transition plan. If ACB does not announce a new CEO soon, we feel that the company could continue to lose momentum. 

HEXO Corp. (HEXO) looks like a reverse stock split is imminent

Many investors have been speculating that HEXO (HEXO) could be the next cannabis stock to initiate a reverse stock split. It has fallen below $1 per share, which is the minimum requirement to stay listed on the NYSE, and investors are getting concerned. We are expecting the company to receive notice soon from the NYSE that they will start the delisting process and the company will have a few options. First, they can provide the NYSE with a remediation plan in order to get the stock back above $1. Second, they can let the delisting process take place and move to a smaller exchange. We believe that HEXO will opt for a reverse stock split as Aurora Cannabis has already done so, with decent success. 

Canopy Growth (CGC) faces more downgrades 

Last week Canopy Growth (CGC) reported a horrific quarter that included falling revenues and over $1.3 billion in losses.  Then the company received further downgrades on Monday. The stock initially fell last week but managed to stabilize this the week.  We will be keeping our eyes open for any further signs of weakness. As the company moves forward, it's essential that they get their SG&A expenses down in order to move closer to profitability. Although the company still sits on a nice chunk of cash, at this rate it will be burning through it a lot faster than many investors think.   

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ACB shares were trading at $13.89 per share on Friday afternoon, down $0.34 (-2.39%). Year-to-date, ACB has declined -46.41%, versus a -0.21% rise in the benchmark S&P 500 index during the same period.

Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles.

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