CRON Stock Forecast: Why Cronos Group Is Acting Against Marijuana Market Momentum

cron stock forecast 2018
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CRON Stock Forecast

Cronos Group Inc (NASDAQ:CRON) has been a bit of a maverick in the marijuana industry, or at least it has been ever since it became the first pure-play marijuana stock to list on the Nasdaq.

Since then, the CRON stock forecast has been hard to nail down. The stock often sets off on its own track, with little heed paid to marijuana industry trends.

So what does the future hold for Cronos stock, and how will the CRON stock news influence its movement?

First, let’s tackle that news.

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Cronos Group’s biggest move as of late was the signing of a $122.0-million deal with Ginkgo Bioworks to genetically engineer the active compounds found in marijuana. It’s like going into “a foot race with a Formula One race car,” said Cronos CEO Mike Gorenstein in a recent interview. (Source: “Cronos Partners With Ginkgo to Develop Lab-Grown Cannabis,” Bloomberg, September 4, 2018.)

While that CRON stock news sounds lovely, it only served as a temporary boon to the Toronto-based company.

The stock received a shot in the arm at the time, with shares rising 16% in the immediate aftermath of the announcement. But the gains were short-lived; Cronos shares saw heavy losses the following week.

The deal was not enough to generate a bullish run, even in the midst of a booming marijuana market.

Why Cronos Stock Dropped

So, if we can’t count on positive headlines to generate sustainable gains for Cronos stock,  how can we best predict the future of the company?

First, we need to understand why the stock fell in the first place.

Cronos has always been on its own road precisely because of its position on the Nasdaq. This leads to a higher degree of volatility compared to other pot stocks, due to its increased exposure to U.S. and international investors.

By being on one of the largest stock exchanges in the world, CRON is subject to the whims of countless more investors than those who invest on Canadian exchanges.

As such, Cronos stock fluctuates to a much higher degree versus other marijuana stocks.

This volatility can translate into big gains for the company, but so far it has mainly resulted in downswings because investors have proven to be fickle.

The company’s position on the Nasdaq is further complicated by another very popular marijuana company trading on the exchange: Tilray Inc (NASDAQ:TLRY).

The first pure-play marijuana company to have its initial public offering (IPO) on the Nasdaq, Tilray stock has been on a wild roller-coaster ride ever since it entered the market.

With huge, 100%-plus gains in a matter of weeks, the CRON stock forecast has been altered. Tilray stock’s mercurial changes have led to investors often treating Cronos as a lesser version of Tilray, with it rising and falling a few degrees behind Tilray stock.

After Tilray’s very impressive early start on the Nasdaq, the company has had a few substantial pullbacks. As a side effect, Cronos stock has suffered.

This leads us again back to the CRON stock news: at the end of the day, what happens with Tilray stock will probably have more profound effects on the only other marijuana stock on the Nasdaq than will news headlines.

Having said that, if the company can score a Big Alcohol partnership or another strong investment, expect to see the tone change for the Cronos stock forecast.

Is CRON a Long-Term Stock?

There are a lot of reasons to be hot on CRON stock in the long term.

The company’s position in Canada is strong. It has scored multiple supply agreements and has expanded its capacity over the past few months, making it ready for Canada’s legalization of recreational marijuana.

Furthermore, the CRON stock forecast is bolstered by the marijuana market gains that the company has made. Overall, the stock is in a good position to take advantage of what continues to be one of the fastest-growing and most exciting industries in the world.

But there is a “but” here.

The “but” being that, while CRON stock on paper looks strong, its position on the Nasdaq alongside Tilray makes its future unpredictable and highly volatile.

With Tilray being the focus of investor attention, Cronos has only slightly benefited from TLRY stock’s massive runs while being heavily penalized whenever there is an investor retreat from the cannabis sector.

On top of that, it’s hard to recommend CRON stock for the long term, versus companies that simply have better outlooks, like Canopy Growth Corp (NYSE:CGC).

Chart courtesy of StockCharts.com

As you can see in the chart above, Canopy Growth (blue line) took a hit when much of the marijuana industry saw a downturn in September—but not nearly to the same degree as Cronos stock (black line).

Other cannabis stocks, like Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB), shown in red on the chart above, were able to surge on the back of good news while CRON stock was stuck in the shadow of Tilray.

Analyst Take

The Cronos stock forecast for the coming months should be positive, but the stock’s volatility makes it hard to make predictions with any sort of certainty.

While other marijuana stocks, like Canopy Growth, have more reliable futures, Cronos Group’s presence on the Nasdaq alongside the king of volatility in the cannabis industry—Tilray—makes it difficult to formulate any sort of confident, long-term forecast.

With that in mind, I feel positive about Cronos stock,  even though I believe that several competitors are better picks.