Did you ever believe that top Canadian cannabis producers could experience such a fall from grace? Shares have been declining rapidly and continue to do so this week.
The trend continues today, and they all show over 10% in losses. So what's going on?
Top Canadian Cannabis Producers in the Red
The four biggest names in the sector are easily Canopy Growth (TSX:WEED) (NYSE:CGC), Aurora Cannabis (TSX:ACB) (NYSE:ACB), Aphria (TSX:APH), and Tilray (NASDAQ:TLRY).
Yesterday delivered double-digit percentage declines, and, as stated, today they aren't faring any better—stocks are dropping steeply as investors appear to be vacating the space.
In the last five days from when cannabis was made legal in Canada, here's how the top Canadian cannabis producers dropped. Legalization day was Wednesday the 17th and today is Tuesday 23rd:
- Canopy Growth has dropped from $65.25 to $49.50—lost 24% approximately.
- Aurora Cannabis has dropped from $13.90 to $9.66 at present—lost 30% approximately.
- Aphria has dropped from $19.34 to $14.38 at present—lost 25% approximately.
- Tilray has dropped from $149.16 to $109.11 at present—lost 27% approximately.
Canada Legalizes Adult-Use Cannabis
Last Wednesday was considered a historic occasion for Canada; a 93-year-old prohibition was lifted. It was an anticipated event and investors had spent much of 2018 buying up shares in anything cannabis-related.
But contrary to what was expected, shares began declining weeks before legalization arrived. It seemed that the hype had peaked even though the catalyst for the hype was still only around the corner.
Once this bearish market took hold, it seems volatility for the top Canadian cannabis producers has only worsened.
Why the Sell-Off?
One reason for the sell-off could be that the industry was somewhat ill-prepared for legalization. Dispensaries were already running out of weed by day two. Shortages of this nature may have scared investors away.
>> Aurora Cannabis is Now Live on the NYSE but Stock is Tumbling
On one hand, something like this says that the industry isn't able to meet demand. Perhaps it needs at least several months to mature.
On the other hand, did people expect total maturity on day one? Surely not.
But then there's the theory that this sector was never supposed to gain this much investment to begin with. What was being sold was hype and what we are seeing now are the stocks coming back down to earth.
So maybe cannabis has been overvalued all this time?
Either way, the top Canadian cannabis producers are suffering... hard. Do you think they can turn it around or are the pieces falling where they were always meant to?
Leave us a comment below!
Featured Image: Depositphotos/© wrangler
