This story was originally published here.
The cannabis sector was scorching hot in 2018.
HEXO Corp. (NYSE: HEXO) rocketed from a $93 million stock no one had ever heard of, to a $630 million rock star.
Cronos Group Inc. (Nasdaq: CRON) had a similar story. It was a $134 million junior in 2016 and hit nearly $2 billion in market cap by the end of 2018.
But the market got ahead of itself.
It turns out that creating a retail market out of an illegal substance is harder than it looks.
On March 31, two leading cannabis companies reported their fourth quarters. As my colleague Anthony Planas reported in this Marijuana Market Update, they weren’t great.
Both Cronos Group and Hexo surprised analysts in a bad way.
Analysts expected Cronos to generate $10.7 million in revenue for the quarter … but the company only managed $7.3 million. Cronos also had to amend earlier filings. It cut its first and third-quarter earnings from what they reported.
It’s a bad look. But they weren’t alone.
HEXO lost C$298 million for the quarter. Analysts expected them to only lose C$19.4 million.
Those losses caused a huge backlash. These negative surprises and the bad press sent shares plunging. Cronos shares fell 18%. HEXO’s shares fell 27%.
And their performance dragged down the entire marijuana sector. That’s because these two companies make up 16% of the Horizons Marijuana Life Sciences ETF (TSX: HMMJ). As you can see below, the exchange-traded fund (ETF) recently collapsed to its lowest point since its launch:
The problem is that the Canadian pot rollout is going slower than analysts expected.
Editor's Note: To see where the opportunity is, click here.
White House Memo Could Help Send This on a 22,540% Growth Surge
When the White House pushed its “energy dominance” doctrine, promising a “Golden Era of American Energy”…
Denver-based Whiting Petroleum jumped 178%, HollyFrontier Corporation tripled and Texas company Jones Energy jumped 320%.
When the government declared: “We will begin to revive and expand our nuclear energy sector…”
Shares of both International Isotopes and Lightbridge Corporation bounced more than 75% in a few months, and U.S. Nuclear Corporation returned 1,639%.
And on February 16, 2017, Resolution 38 was signed in support of the coal industry.
NACCO Industries – the public holding company for the North American Coal Corporation – responded with a 223% gain.
As you can see, the U.S. government has a long track record of triggering massive gains. Now a controversial new video reveals the White House’s newest priority – to roll out a radical technology.
On page 1 of a recent, official government memorandum, it states that “America must be first” in launching this innovation. One that Bloomberg confirms will “transform the way we live and work … and add trillions of dollars to the global economy every year.” And that experts are calling the “next big thing.”
In this special video presentation, you’ll find out why this technology could be the greatest stock market story of the decade.
To see it, simply go here now…
