Cronos stock is in the red this week after Cronos Group (TSX:CRON) (NASDAQ:CRON) delayed the release of its fourth-quarter and full-year earnings results, simply citing a "delay in the completion of its financial statements" as the reason.
Cronos Stock Down 13%
Cronos Group was scheduled to release its earnings on Thursday, February 27, and has yet to offer a rescheduled date, although the company will make a further announcement in a subsequent press release with a new date. While no definitive reason has been made for the delay, some Twitter speculators have pointed out that Cronos is switching from IFRS accounting to GAAP and could possibly be required to restate earnings for the last three years. Cronos stock has dropped 13% this week following the delay.
While analysts agree that the delay doesn't seem to be much more than what it appears—an unforced error by Cronos's accounting team—there is speculation that the delay could also be a result of the potential for a wider-than-expected loss, which would have an exacerbated effect on Cronos stock given the market turmoil in recent weeks as the Coronavirus wreaks havoc on equity markets. The cannabis space is also incredibly vulnerable at the minute, particularly given the recent struggles of MedMen (CSE:MMEN) (OTCQX:MMNFF) and Aurora Cannabis (TSX:ACB) (NYSE:ACB).
Gearing Up for a MedMen Merger?
Despite being singled out as a pot stock with huge potential for gains this year, Cronos Group is still losing money. In the third quarter, the company posted an impressive gain in net revenue of 238% to C$12.7 million; however, this stemmed entirely from a revaluation of warrants and anti-dilution rights issued to its biggest backer Altria (NYSE:MO)—and that revaluation was a result of the falling value of Cronos stock.
Some speculators have pointed out that Cronos could actually be gearing up to acquire MedMen, pointing to the preexisting relationship between the two companies and the fact that a combined entity would be comfortably the largest cannabis firm in the US. Regardless, the company is still going to need a solid earnings report to halt the slump in Cronos stock.
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