Cronos stock is in the green today after Altria's (NYSE:MO) CFO Billy Gifford backed the tobacco giant's investment in Cronos Group (TSX:CRON) (NASDAQ:CRON) during an earnings call with analysts on Thursday.
Altria Happy With Cronos Investment, Insists CFO
Altria, one of the largest tobacco companies in the world and the maker of Marlboro cigarettes, purchased a 45% stake in Cronos Group for $1.8 billion USD, making it the largest shareholder of Cronos stock. As the cannabis market's enduring struggles continue, Gifford has insisted to analysts that his company is happy with its Cronos investment and pointed to its recent acquisition of US CBD company Redwood Holding as a beneficial move going forward.
Access to CBD Market in US
Cronos completed its takeover of Redwood in early September in a deal worth $300 million USD. Cronos will now get access to Redwood's Lord Jones range of CBD-infused skincare products, as well as access to the CBD market in the US, which could reach $20 billion USD in value by 2024. “We believe the acquisition fits well into Cronos’ strategy of building differentiated brands and disruptive intellectual property,” said Gifford. “We’re very excited about [...] the opportunity for Cronos to position itself for long-term leadership.” Cronos stock is up 1.2% on Friday.
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Despite the public backing of its majority shareholder, Cronos Group has endured a rough year in line with the rest of the market. As scandals, supply issues, and high-profile sacking dominate pot stock headlines in the freshman year of legal weed, stocks across the board have tanked drastically, including Cronos stock, which is down nearly 65% since March. While those issues have rattled some of the biggest names on the market, Cronos has actually performed reasonably well throughout 2019.
Cronos Stock is New King in the North
Last month, Stifel analyst Andrew Carter upgraded Cronos stock from a hold to a buy, declaring it the "New King in the North" among Canadian pot stocks. He argues that Cronos Group’s current value represents a discount compared to global competitors due to underperformance and losses obtained during a “sector meltdown” since July. Having posted a 200% increase in quarterly earnings in its Q2 results, it's difficult to see any holes in Carter's assessment.
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