How affected is the cannabis industry by the Corona crisis?

With slight gains in the past week, cannabis stocks probably followed the overall market, which began to recover from the oil price shock. However, quite a few cannabis shares on the stock market have also suffered a loss. The season with the quarterly reports is running and many investors better sell out before for security reasons. The current corona crisis is also taking its toll on the cannabis business.

However,  there was also positive news especially in research and export of cannabis medicine. In addition, cannabis stocks are still at an exciting level for many investors.

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Recent developments in the cannabis industry

Cannabis shares in the past week could not be analyzed without a look at the effects of the coronavirus pandemic on the industry. The supply chains are increasingly at risk, while distancing and lockdowns are testing the power of the industry. Although cannabis users and medical patients overseas continue to buy cannabis heavily and invest more and more in food and drinks, after all, smoking cannabis is a risk for many people in times of COVID-19. Cannabis 2.0 from gummy bears to hash cookies is slightly more expensive than cannabis for smoking or vaporizing, which is additionally good for sales.

The company Cronos, a big player in the cannabis industry, was able to almost double its sales in the first quarter. Of course, these three months are still before the actual pandemic, but the figures are promising. Especially the mentioned new cannabis edibles have been sold very well by Cronos, so the company is hoping for an end of the crisis soon.

Good news also came from exports. For the first time, Colombia, which is considered a promising cannabis market, is selling cannabis seeds abroad. It is quite possible that a new, potent exporter will emerge there, especially since cannabis for recreational use might be soon legalized by the Colombian government. The cannabis company Avicanna, which is listed on the stock exchange, is also involved there.

However, investors should be careful of the current trend towards capital increase and the split of the shares certificates. All cannabis companies need cash and because not every investor has a big stake in the company, many of them use traditional methods, issuing young and new shares and this can logically dilute the price.

In addition, also the chart analysis recommended for a long time has been worthwhile in the past week for cannabis shares. That is because there have been quite attractive daily movements, which is good for traders who are now selling cannabis or buy the stock on a short-term basis and immediately sell it off again.

Selected cannabis stocks at a glance

Canopy Growth: Investors like Constellation Brands’ shareholding and many others still consider the company the safest in the market. However, the high costs are depressing and the shares price went down a corner to around $15 (€14).

Aurora Cannabis will be reporting its quarterly figures this week, on Thursday, May 14th to be exact, and investors will be watching closely as the cannabis business is being severely affected. In the apron, the share sank down already under 60 cents, which has to do however also with the described stock split.

Tilray begins with the storing of cannabis, these are the excrescences of the Coronavirus, which makes planning difficult and already by the distance rules impairs the indoor cultivation. Tilray could increase on around seven euro, but there was not really meaningful information for it.

Aphria received an important approval for cannabis in the European Union but also started a program to pay debts with shares. At first, investors were reluctant, after all this is an indication of a lack of capital at the otherwise mostly quite respected cannabis company on the stock exchange.

Deutsche Cannabis AG oscillates between about 60 Cent and over 50 Cent and there is no other news. Whoever ignores the news situation and invests in the company, could make very good profits since the beginning of the year.

Outlook for calendar week 20/2020

The quarterly report of Aurora Cannabis is likely to be central. The company may look cheap on the stock market in terms of price, but it continues to be a giant in terms of volume and in terms of cultivation area and holdings. It is precisely this overstretching that does not give investors good hope!

Even before the pandemic, there was a lack of capital. In addition, because governments do not make a sustained effort to promote cannabis as an economic factor, even promising companies are deeply affected by the current crisis.

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(Featured image by Sharon McCutcheon via Pexels)

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