CannTrust stock has watched its share plunge from $10.17 to $7.46 USD at present, in a little over 2 weeks. The catalyst for the decline? A very-ill timed stock offering.
Now, analysts at SeekingAlpha are rating these shares a "Sell". Is it really that bad over at camp CannTrust Holdings (TSX:TRST) (NYSE:CTST)?
CannTrust Stock on the Decline
CannTrust Holdings announced a $200 million USD equity offering at $5.50 USD per share, mere moments after it released poor Q4 results.
Management decided to issue a whopping 30% of its total shares outstanding. Adding insult to injury, it is offering those at a price that is almost 50% below what the CannTrust stock price was just one month ago. How could investors get on board with this?
Where investors were already reeling from cannabis sales of only 1,400 kilograms in the quarter, this was another blow too far; CannTrust stock tanked on the Thursday of the announcement, dropping 51% from its 52-week high of $15.50.
What hurts even more, is that shares have now erased most of their 2019 gains.
SeekingAlpha Says "Sell"
With strong statements such as "CannTrust's Q4 results were as bad as it gets when it comes to the legalization" and "management has failed to deliver on the crucial moments following legalization and they are getting punished," SeekingAlpha's sentiment about these shares is clear.
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Based on the stock's recent history, investors are sharing the same ill-sentiment. CannTrust has underperformed at a crucial time when peers, such as HEXO (TSX:HEXO) (NYSE:HEXO) and OrganiGram (TSXV:OGI) (OTCQX:OGRMF) are, simply, shining. The company traded in tandem with its peers until the end of March when it released those tepid results.
Now, the disparity is all too clear; CannTrust stock, by comparison, is ailing fast.
The Takeaway
Can CannTrust Holdings rescue itself? Very possibly, but don't expect miracles anytime soon. SeekingAlpha might seal the deal for investors:
"We think CannTrust shares will likely remain under pressure in the next few months as we see no obvious catalyst in the near-term. Based on 2019 Q1 preliminary revenue guidance, we expect nothing but continuous disappointment for the upcoming quarter."
But what do you think? Some of the biggest brands in the world have rebounded successfully from the lowest points. Is CannTrust still finding its feet? Would you still consider CannTrust stock?
Featured Image: Canva
