Marijuana News Today
With the exception of one special case, we have been seeing pullbacks across the pot stock market in the marijuana news today.
This isn’t, however, the cannabis industry’s fault. Instead, the larger malaise of the stock market in general is hurting the volatile, nascent industry harder than most.
The U.S.-China trade war was thought to be entering a detente as the two countries seemed to be reaching an understanding. The negotiations prompted a bit of a rally in the stock market, but that rally was short-lived. (Source: “Dow plunges 799 points on trade, slowdown fears,” CNN, December 4, 2018.)
Now we have stock market damage pretty much across every industry, with marijuana stocks hardly being immune.
Far from it; due to their inherent volatility, marijuana stocks are going to be some of the hardest hit.
That doesn’t mean investors should panic.
If we are indeed in for an economic slowdown following the U.S.-China talks (as some metrics would indicate, like the U.S. Treasury yield curve inverting, which has happened before nearly every recession in the past), then the marijuana stock market is going to be in for a rough ride. (Source: “The U.S. Yield Curve Just Inverted. That’s Huge.” Bloomberg, December 3, 2018.)
But the key thing to remember is that pot stocks are long-term buy-and-hold trades. At least they are if you want to eke out maximum value.
There’s still a ton of room left for development in the legal marijuana industry. This is, after all, a young product that is only legally available in a few select regions, but with a worldwide potential of dozens of billions of dollars.
The development of the pot industry is going to take years. That means we may very well see a few recessions or mass downward trends take hold in that time. Investors need to be able to weather that storm for the best returns because brighter days lay on the other side.
U.S. and European legalization, investment from outside sources, company growth…all these factors are likely to promote huge gains in the marijuana industry of tomorrow. Whether the present looks bleak doesn’t detract from that future potential.
The one company that has been able to take the current market slide and remain standing is Cronos Group Inc (NASDAQ:CRON).
Cronos stock jumped by another almost-six percent, and has seen its value swell by over 20% over the past five days.
These are very impressive numbers, largely the result of the possible Altria Group Inc (NYSE:MO) acquisition of Cronos that is reportedly in the works. (Source: “Altria in deal talks with cannabis company Cronos Group,” Reuters, December 3, 2018.)
Altria, the makers of “Marlboro” cigarettes, has been rumored to be looking at getting into the marijuana market for some time. If Altria’s purchase of Cronos comes to fruition, expect to see a massive spike in CRON stock relative to the facts of the deal—likely numbers that will favor Cronos shareholders.
While the deal has yet to be solidified, reports say that it’s en route. Depending on the value of the deal, this could be massive not only for Cronos, but for the entire marijuana industry.
Furthermore, it could encourage more companies to do the same, creating a rush in the pot stock market if multiple large investments and acquisitions take place.
Following up on yesterday’s edition of our “Marijuana News Today,” we have Aphria Inc (NYSE:APHA) stock getting hammered in the stock market.
Aphria stock crumbled in early-morning trading to the tune of 21% today, and is down about 47% over the past five days.
This is, frankly, a bad pick right now. Once valued as high as $17.00, APHA stock has witnessed an utter collapse and now sits at $4.51.
I could say that Aphria investors ought to hold out until the next rally before selling off, but I have no idea when that will take place.
The company has taken hit after hit, with the latest one being accusations that Aphria bought Latin American assets that were essentially worthless in order to benefit Andy DeFrancesco, who is SOL Global Investments Corp‘s(OTCMKTS:SOLCF, CNSX:SOL) chair and chief investment officer. (Source: “Deal maker with Aphria ties refutes short-seller allegations that hit stock,” Financial Post, December 4, 2018.)
CRON and APHA Stock Performances
The CRON stock (black line) and APHA stock (blue line) performances from the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The marijuana news today is not exactly overflowing with good tidings. Across the board, we’re seeing drops in value, largely motivated by a wider stock market fall that is no fault of the pot industry. Still, this is not positive for shareholders.
The key thing to remember, however, is that the reason that people invested in marijuana stocks is as true today as it has ever been: the future is damn exciting.
There are so many markets just waiting to be tapped by the pot sector. It’s just a matter of time until they undoubtedly open to legal marijuana. The issue is the waiting game and all the market pitfalls along the way.
But for patient, steel-nerved investors, the cannabis industry could still be a great long-term option.