The cannabis industry continues to struggle in 2020. Aurora Cannabis (TSX:ACB)(NYSE:ACB) has crashed 64% so far this year and HEXO Corp (TSX:HEXO)(NYSE:HEXO) is even worse, down 66%. Industry-leading Canopy Growth Corp (TSX:WEED)(NYSE:CGC) is doing a bit better but its shares have still fallen by 22%. But as bad as things have been – they could get even worse this month.
Both Aurora and Canopy Growth are expected to release their quarterly results in May. And while we know that cannabis sales got a boost in the early part of March when people were stockpiling essentials, that tapered off during the latter part of the month. A lot will hinge on how the companies will say they did in April – even though the month won’t be included in their most recent quarterly results.
But it will be an important gauge as to how resilient and how strong the industry is. With more people now unemployed, it’s hard to envision a scenario where pot stocks won’t be in worse shape moving forward. An underwhelming performance in April and a negative outlook by two of the most popular pot stocks in the world could send share prices crashing even further.
Cannabis companies are already struggling to get to breakeven amid strong sales growth. With revenue stalling or potential falling, they’re not going to be in any better shape moving forward.
This past quarter’s results may still be okay, but future quarters may not be. And if the outlook isn’t great from Aurora and Canopy Growth, expect other stocks to fall right along with them.
