Capital 10X – Pot Stocks Weekly Performance Wrap (October 11th, 2019)

Below is a comparison of the biggest winners and losers in PotStocks this week, grouped by market cap and country. See whether your picks are outperforming or if you need to rebalance your portfolio.

The High Level

Lots of news and movement this week, unfortunately, entirely to the downside once again. The index (HMMJ) fell a shocking 14% this week, leaving it down 25% on the year. Only two companies, Trulieve and Green Growth Brands, finished the week in the green.

Hexo’s stock fell after they reported that Q4 and full-year revenue will be well below expectations. They also withdrew guidance for fiscal 2020. The stock was down as much as 26% during the day Thursday and finished the week 38% down overall. They are scheduled to report earnings on Oct. 24.

Until the government loosens regulations and allows more stores to be built, we don’t expect to see much improvement in revenues. As Tantalus CEO Dan Sutton stated, the number of stores are a key metric for measuring the legal market’s growth.

Another big weekly loss came from The Green Organic Dutchman. The company press released that they are looking for alternative sources of funding after they determined they wouldn’t be able to obtain a credit facility until their greenhouses are generating substantial revenues.

This funding is needed to complete the buildout of their Ancaster and Valleyfield facilities. While Ancaster grow rooms are completed and licensed, the processing facilities still need to be finished while Valleyfield Phase 1a needs substantial CapEx as well. Many investors were caught off guard with this news after being given the impression the facilities were fully funded.

Management stated they aren’t looking to any dilutive sources of funding, but instead would look for bridge loans with higher rates to take them to the spring when they believe they will be able to secure the larger credit facility. TGOD rebounded slightly today, but it barely made a dent in their total weekly drop of 40%.

U.S. based retailer MedMen was another big loser this week, falling 28% on news it would be backing out of the acquisition of PharmaCann. The company cited the need to focus its capital elsewhere given the difficulties raising capital in these tough markets. Apparently PharmaCann’s assets require significant capital expenditures, making the deal unfavourable for MedMen right now.

Small craft producer GTEC reported earnings this week, and while we walked away impressed, market sentiment led to an 18% drop on the week. We sat down with CEO Norton Singhavon to talk about the results and provided our own take on their performance.

It seems unlikely we will see much life in pot stocks anytime soon, however, there are a few potential catalysts on the horizon. Next week is the official beginning of legalization 2.0, but unfortunately, products won’t hit the shelf until months later. As well, Aphria reports earnings on the 15th, and while it’s unclear whether they will meet analyst expectations, if they do it will certainly be the first real piece of good news in a while.

Next week is also the lead up to the Benzinga Cannabis Capital Conference in Chicago. Capital 10X will be there with an interview booth to speak with management teams from LPs and MSOs. Last year the presentations were excellent and the interviews plentiful. Stay tuned for more info.

Pot Stocks Group Performance

Source: Yahoo Finance

Canadian Pot Stocks – Large-Cap Weekly Performance

Source: Yahoo Finance

Canadian Pot Stocks – Large-Cap YTD Performance

Source: Yahoo Finance

Canadian Pot Stocks – Mid-Cap Weekly Performance

Source: Yahoo Finance

Canadian Pot Stocks – Mid-Cap YTD Performance

Source: Yahoo Finance

Canadian Pot Stocks – Small-Cap Weekly Performance

Source: Yahoo Finance

Canadian Pot Stocks – Small-Cap YTD Performance

Source: Yahoo Finance

U.S. Pot Stocks – Large-Cap Weekly Performance

Source: Yahoo Finance

U.S. Pot Stocks – Large-Cap YTD Performance

Source: Yahoo Finance

U.S. Pot Stocks – Mid-Cap Weekly Performance

Source: Yahoo Finance

U.S. Pot Stocks – Mid-Cap YTD Performance

Source: Yahoo Finance

U.S. Pot Stocks – Small-Cap Weekly Performance

Source: Yahoo Finance

U.S. Pot Stocks – Small-Cap YTD Performance

Source: Yahoo Finance

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Evan Veryard
Evan Veryard has a Bachelor's of Chemical Engineering from McGill University and a MaSc. of Chemical Engineering from RMC. He has over 6 years of research experience focusing on industrial materials. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

Leave a Reply

avatar
  Subscribe  
Notify of