On Monday, December 17th, CRON stock climbed higher, earning market attention, before dropping back into the red.
Trading at just over $15, the initial rising, which lasted until 1 PM, comes ten days after the Cronos Group (TSX:CRON) (NASDAQ:CRON) announced a major deal. It also comes three days after CRON stock closed down 10%.
CRON Stock: Bulls vs. Bears
Despite its tumble on December 14th, CRON stock seems to be trying to bounce back, likely because of the bullish outlook on the Altria (NYSE:MO) investment. However, not everyone feels that way. Although CRON stock opened positively on December 17th, the afternoon is telling a different story.
Around 12:00 PM, according to Yahoo Finance, CRON stock was up nearly 2%. Then at 1:00 PM, things changed, and the stock is now down 0.33%, putting the trading price at $15.08.
What Caused the Fluctuation?
Earlier this month (December 7th), Altria disclosed that it would acquire a 45% stake in the Toronto-based vertically integrated cannabis company. The deal allows Altria to increase its stake (to 55%) over the next four years. And even though Cronos Group is giving up equity ownership, in what is now a rapidly growing market, CRON stock needs the capital if it wants to continue to grow. It also must have it to compete with others in the industry.
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Perhaps the quick change in trading on Monday comes from bears, those worried about CRON losing equity ownership. However, it is important to remember that this deal is bullish for not only Altria but Cronos as well. Aside from needing capital, Seeking Alpha reports that Altria (which owns Philip Morris) will help Cronos Group with marketing and supply chain management.
Long-Term Forecast
The stock market, let alone the cannabis market, is a tricky place. Moving from green to red in less than an hour shows either two things; a) it's just one of those days or b) the market is bullish and bearish about Cronos Group losing significant equity ownership.
It's important to remember that the Altria/Cronos deal is a good thing. It means the company will be able to execute its growth plan—and that could influence CRON stock.
As we move away from December and into 2019, it will be key to keep a close eye on this weed stock.
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