Cronos stock is in the green today after Cronos Group (TSX:CRON) (NASDAQ:CRON) announced a $20 million AUD initial public offering of its joint venture, Cronos Australia.
Cronos Continuing Australia Expansion
Established in 2018, Cronos Australia is a joint venture between Cronos Group and NewSouthern Capital Pty Ltd. The IPO will see 40 million new shares issued at a price of $0.50 AUS, and once completed Cronos will hold a 31% stake in the new entity, which is expected to have an initial market cap of $64.4 million AUD. Cronos stock is trading up slightly today at $8.34 following the announcement.
"We are excited by this offering, which enables Cronos Group to unlock value for our stakeholders while also continuing to participate in Cronos Australia’s growth as they work to become the market leader for medicinal cannabis in the Asia-Pacific region,” said Cronos CEO Mike Gorenstein. In a further boost for Cronos stock in North America, the company will import cannabis dry flower and oils from Canada with the intention of using Australia as a beachhead for its operations in the Asian Pacific market.
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Cronos Stock to Debut on ASX in November
The IPO is scheduled to take place between October 16 and October 25, with Cronos stock expecting to debut on the Australian Stock Exchange (ASX) November 11. Australia has one of the highest cannabis prevalence rates in the world, and it is estimated that 750,000 Australians use cannabis every week, and approximately 300,000 use it on a daily basis.
With pot stocks sinking across the board throughout 2019, Cronos Group has been one of the few companies to turn a profit in the early days of legalization. In its Q2 results posted in August, Cronos reported revenue of $10.24 million CAD, which topped analyst expectations of $7.4 million CAD. While the street expected a loss of $0.30 per share, Cronos actually generated profits of $0.22 per share. Despite the strong results and international expansion, Cronos stock is down nearly 65% from a 2019 peak of $23.70 CAD.
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