Marijuana Stock Report: Pot Stocks Tumble As Trade Wars and Tech Take Panicked Sellers To The Brink
The North American Marijuana Index began the week down on Monday as pot stocks fell victim to another bout of Wall Street’s short-term memory loss, with investors once again panicked over declining tech stocks and trade war fears. New Memento-levels of forgetfulness plagued the markets on Monday as crucial indices traded below their 200-day moving averages and the S&P 500 hit new lows not seen since Brexit. Trade wars, tech sell-offs, and market correction now have investors pinning a 50 percent chance on the economy falling into a recession. The Index fell 9.44 points, or 3.90 percent to close out Monday at 232.49.
The United States Marijuana Index sank 1.96 points, a decline of 2.59 percent, to close out the day at 73.63, while the Canadian Marijuana Index dropped an impressive 32.84 points, or 4.79 percent, to end Monday at 653.00.
Falling from its record-high this past January, the S&P 500 fell into a ten percent correction, putting investors on notice that the nine-year bull market may be coming to an end.
"It’s more complicated than just a tech selloff. What's hurting everything is that the S&P went through its 200-day moving average," said Brian Battle, director of trading at Performance Trust Capital Partners in an interview with Reuters. "That attracts momentum sellers, and they don't care what the fundamentals are."
The Dow Jones Industrial Average plunged 458.92 points, a decline of 1.9 percent, to end Monday at 23,644.19. Similarly, the S&P 500 fell 58.99 points, a drop of 2.23 percent, to close out the day at 2,581.88 and the Nasdaq Composite dropped 193.33 points, or 2.74 percent, to close out the day at 6,870.12.
Meanwhile Barron’s cover story this week accused Canada’s largest cannabis companies of being overvalued and on the verge of a pot stock bubble. While the article concedes that the weed stock market is much more significant than most analysts admit, the authors argue that cash flows and valuations are not on equal footing.
“If Canada’s retail market can reach $9 billion in annual sales in a few years—as one bull estimates it will—that would yield only a couple of billion dollars in cash flow to wholesale producers like Canopy,” states the article in Barron’s. “So today’s investors are effectively paying 15 times the industry’s cash flow five years from now, a generous multiple. Moreover, there’s reason to believe these revenue forecasts are overly optimistic.”
Horizons Marijuana Life Sciences ETF (HMMJ.TO) fell CAD$0.71 per share, a decline of 4.17 percent to close the day at CAD$16.32. Similarly, the Evolve Marijuana ETF (SEED) fell $0.66 per share to close the day at CAD$17.34.
BlissCo Is Feeling Happy
Feeling happy is BlissCo Cannabis Corp. (CSE:BLIS) who announced on Monday their wholly-owned subsidiary Bliss Co Holdings Ltd. received an Access to Cannabis for Medical Purposes Regulation (ACMPR) License to cultivate dried cannabis flower. The company, whose B.C. facility, will package, process, and distribute medical and adult use cannabis, has a two-year supply agreement with The Supreme Cannabis Company Inc. (CVE:FIRE).
“Our ACMPR licence to cultivate allows us to execute on our strategic plan to build a distribution, brand and extraction focused cannabis company,” remarked company CEO and Chair Damian Kettlewell. “We can now apply to expand our license to include cannabis oil production. At the appropriate time we will apply for a license to sell both dried cannabis and cannabis oil, from our own production and with premium dried cannabis sourced from our supply agreement.”
CBD Reduces Pill Intake
New Frontier Data is out this week with a new Cannabit on the benefits of cannabidiol and how it reduces the use of other pills. According to their research, “California-based Care by Design likewise found that among patients using CBD, prescription drug use fell to 1/4 of original levels, from a daily average of 2.8 pills per day to less than 1.” Check out the graphic below: