CannTrust Holdings (TSX:TRST)(NYSE:CTST) stock was up 14% in early afternoon trading on July 31. On July 25, CannTrust terminated former CEO Peter Aceto "with cause". This was after an investigation revealed that Aceto had revealed through emails that he had knowledge of CannTrust’s illegal growing operations.
The board of directors also demanded the resignation of chair Eric Paul.
Shares of CannTrust shot up immediately after Aceto’s firing was announced. The company said that it plans to promptly complete its investigation and bring operations into regulatory compliance.
CannTrust announced that it had hired a financial advisor for a strategic review of its option. The company appears to be pursuing a sale, and interim CEO Robert Marcovitch says that talks with potential buyers are still in the early stages. CannTrust still possesses valuable infrastructure that could provide a boost to some of the larger LPs.
When recreational cannabis was legalized top analysts and industry experts expected some of the middle-ground LPs to face challenges. This is a unique situation, but still demonstrates the difficulty in navigating this new environment. CannTrust stock is still trading less than a dollar away from 52-week lows.
Shares had an RSI of 32 at the time of this writing, which puts the stock just outside of technically oversold territory.
CannTrust stock may be worth a gamble as it explores options into August. It has been decisive after this catastrophic oversight, so things are moving in the right direction.
