Cannabis stocks are on a sustained bear phase that it will take profitability from the major players to restore confidence. CannTrust’s (TSX:CTST) shook investor trust when Health Canada determined the firm produced the goods illegally. Alberta’s $1.3-billion product return will surely sink the company.
Canopy Growth (NYSE:CGC) looked like it would recover back to the $30 range in the last week but ended up falling another 7%. The earnings report posted in August only heightened investor concerns. Canopy reported revenue growing 250% but it still reported an EBITDA loss.
Cronos (TSX:CRON) reported revenue doubling to $10.24 million. But at a market cap of over $3 billion, the valuations are unjustified. Cronos not only needs to report a faster pace of profit growth but also higher revenue.
Aurora Cannabis (TSX:ACB) was close to touching the $5 level last week. On Sep. 11, it reported revenue growing 52% sequentially. But it reported an EBITDA loss of C$11.7 million. Aurora still needs to expand in the U.S. market to realize its growth potential.
Though the business is improving, investors will need to wait longer to justify its current valuations. Bulls continue to unwind their position, waiting for better prospects before re-investing in ACB stock again.
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