Canadian weed stocks slaughtered in same week as Tesla shoots for the stars

With the rapid rise in Tesla shares, CEO Elon Musk’s net worth vastly exceeds the market capitalization of Canada’s 10 largest cannabis companies.

weed stocks cannabis shares

Tesla CEO Elon Musk's well-known love of cannabis doesn't seem to be helping licensed producers' share prices. Joe Rogan Experience / Youtube

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Why do cannabis investments plummet just as some companies’ shares continue to soar in other sectors? Owners of weed stocks are probably wondering about this. Especially after a week in which Tesla shares jumped 22.2 percent and Apple shares climbed 7.2 percent. In comparison, the most valuable publicly traded cannabis company, Canopy Growth Corp., lost 7.3 percent in value over the past five days.

On Friday (August 21), Canopy Growth shares closed in Toronto at $21.15. That left it with a market value of $7.85 billion.

Moreover, Tesla CEO Elon Musk’s famous 2018 pot-smoking episode with broadcaster Joe Rogen clearly hasn’t translated into higher share prices for other Canadian licensed producers.

According to Forbes, Musk’s net worth stands at more than US$91 billion. That vastly exceeds the value of Canada’s 10 largest legal weed operators.

Despite Canopy Growth’s stock decline, Motley Fool contributor Sushree Mohanty offered reasons why she still has faith in the Smith Falls–based company.

First of all, Canopy Growth revenue rose 22 percent in the first quarter. And its international medical marijuana revenue rose by 92 percent compared to the same quarter in the previous year.

Secondly, beverage giant Constellation Brands’ support will help Canopy Growth find a foothold in the high-margin, cannabis-infused drinks business. That may keep it ahead of other weed stocks.

However, it’s still been a dreary year for its investors.

Tilray continues to tumble

The same can be said for those who put their money in Nanaimo-based Tilray Inc. Its share price on NASDAQ fell 9.2 percent on the week to close at US$6.64 on Friday. It’s now worth US$844.46 million.

Tilray is trading at only 20 percent of its 52-week high of US$33.66. That’s because the company has been dogged by shareholder suits, weak earnings reports, and a sharply declining cash position. As a result, it’s been among the worst-performing weed stocks this year.

Canopy Growth and Tilray weren’t the only dogs of the week. Aurora Cannabis Inc. shares plunged 12.5 percent to close in Toronto at $12.42 on Friday. The Edmonton-based weed producer’s market value fell to $1.4 billion.

Aurora-Cannabis
Aurora Cannabis shares declined by 12.5 percent this week. Photo by Aurora Cannabis

The company wasn’t helped by a report by Raymond James analysts, which noted that its recent stock gains seemed excessive in comparison with two lesser-known weed stocks: Organigram Holdings and Village Farms International.

But this was hardly a boon for those two companies, either. Shares in Organigram Holdings, based in Moncton, fell by 14.2 percent to end the week at $1.69 in Toronto. Its market cap stands at $328.72 million.

Village Farms International is based in Delta, B.C. Its shares dropped by 13.3 percent in Toronto to close at $6.57. It’s worth $371.03 million.

Other weed stocks also fell in value over five days

It was a similar story with other Canadian weed stocks. Ottawa-based Hexo Corp. shares declined by 11.4 percent on the week to close at US$070 on the New York Stock Exchange. In Canadian dollars, its market capitalization is $447.07 million.

Shares in Medipharm Labs, which is based in Barrie, dipped by 10.1 percent on the week. It trades at $0.89 in Toronto, with a market capitalization of $121.29 million.

Toronto-based Cronos Group can consider itself a winner—its shares only fell 6.8 percent on the week. Cronos Group closed at $6.99 on Friday in Toronto. It’s worth $2.45 billion.

Investors in Leamington-based Aphria Inc. fared even better. They only lost 2.4 percent over the last five days of trading. The company’s share price closed on Friday at $5.91. Its market capitalization stands at $1.7 billion.

South of the border, Massachusetts-based Curaleaf Holdings shareholders had a dismal week after an impressive run-up in recent months. The stock closed on Friday at $7.89 on the Canadian Securities Exchange, down 13.4 percent over five days.

Curaleaf generates the greatest revenues among licensed producers. However, its market value of $4.2 billion falls far short of that of Canopy Growth Corporation.

Ex-Zenabis CEO Andrew Grieve wanted to be paid based on results. Photo by Zenabis Global

Former Zenabis Global CEO didn’t collect any pay

Perhaps the saddest tale of all in the world of weed stocks concerns the former CEO of Vancouver-based Zenabis Global Inc.

Andrew Grieve left the corner office at Zenabis on December 11, 2019. At that time, the company replaced the military commander on an interim basis with one of its founders, Kevin Coft.

On Friday, Zenabis disclosed that Grieve didn’t receive any compensation for nearly a year as CEO. Not a dime.

That was because the company failed to meet the necessary performance targets for him to be paid. And Grieve volunteered for this arrangement.

Zenabis stock closed at $0.10 in Toronto, a drop of a penny on the week. Not bad in comparison to other cannabis shares.

A new CEO, Shai Altman, will take over on a full-time basis at Zenabis on September 1. Altman is a former president of McCain Foods.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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