It was another wild day for pot stocks, with two issues that trade on U.S. exchanges – Cronos Group Inc. and Tilray Inc. – posting double-digit gains.
In so doing, both shook off negative comments in recent days by short-seller Andrew Left of Citron Research. Mr. Left issued a “sell” report on Cronos last week and, on Tuesday, he tweeted negative comments about the high valuation of Tilray, which he had previously recommended.
Cronos gained nearly 12 per cent to close at $16.38 Wednesday on the Toronto Stock Exchange. At its intraday high of $17.63, it had made up all its losses in recent days from the Citron report, which set a price target of US$3.50 for its Nasdaq-listed shares. The shares closed at US$12.45 Wednesday on Nasdaq. The shares have nearly doubled their Aug. 17 closing price, driven by speculation Cronos could be the next cannabis company to benefit from a deal with a beverage maker.
Comments from alcohol company Constellation Brands Inc., which lit the fire under the recent cannabis rally with a US$4- billion investment in Canopy Growth Corp., helped stoke the flames Wednesday.
Constellation chief operating officer Bill Newlands said Wednesday his company thinks the cannabis industry “is going to be a big business worldwide.”
“This is not going to be limited to Canada. This will undoubtedly be a market that develops in the United States. It’s developing around the world in places like Germany and Australia and other markets," Mr. Newlands was quoted by Bloomberg News as saying at the Barclays Consumer Staples Conference in Boston.
Tilray was Wednesday’s other big gainer, up 17 per cent to US$89.86 on the Nasdaq. While many other cannabis stocks saw heavy trading volume, not all of them gained as much: Canopy was down slightly, its TSX-listed shares closing at $68.47.
Cronos had no beverage news Wednesday, but it had said Tuesday morning it would partner with a Boston-based biotech company, Ginkgo Bioworks Inc., to produce medical cannabinoids.
Cronos also likely benefited as GMP Equity Research raised its target price on the stock to $17, from $7, according to MarketWatch, with analysts saying Cronos “had entered the major leagues” with the deal.