CRON stock is having a very volatility session, falling after initially rising 8% in early trade after Cronos Group Inc. (TSX:CRON) (NASDAQ:CRON) posted a surprise profit for the fiscal second-quarter.
Surprising Quarterly Profit
Over the past year, plenty of new companies have grown rapidly ever since marijuana was legalized in Canada, and one of the biggest names in that regard was Cronos Group. Today, the Canadian cannabis company announced its quarterly earnings for Q2 2019 and surprised the markets by actually declaring a profit. It is believed that the legalization of cannabis in Canada has proven to be a bigger boost for Cronos than others since it is one of the handfuls of companies to have turned a profit.
Cronos Group recorded total cannabis sales for the quarter of 1,584 kilos, which reflected an excellent three-hold rise, and soon, CRON stock started rising. Analysts had estimated a loss of $0.30 CAD per share, but Cronos ended up generating profits of $0.22 CAD a share. The core loss after adjustments stood at $17.8 million CAD for the quarter as opposed to $2.4 million CAD in the prior-year period. Operating expenses rose as much as four times. Revenue during the quarter soared to $10.24 million CAD, also topping estimates of $7.40 million CAD.
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CRON stock has fallen about 12% from this session's high. At the time of writing, the stock is down about 4.50% at $13.79 after rising as much as 8% earlier in the morning session.
However, earlier on in the week, Cronos announced the agreement of a highly important deal that saw it acquire privately held American company Redwood Holdings. The deal is worth $300 million in all, and more importantly, Cronos gets to acquire the highly popular CBD-based cosmetics brand Lord Jones.
Lord Jones is a part of the Redwood stable and could prove to be an excellent addition to the line of brands that are sold by Cronos Group. CBD is all set to grow rapidly in the next few years, and Cronos is trying to position itself as one of the most important companies in this particular sector. Analyst Christopher Carey of Bank of America stated that such acquisitions could be part of the company’s overall strategy towards CBD in the months to come.
CRON stock is up over 25% year-to-date, but still down 45% from its recent peak price of $24.
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