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Vancouver, BC – June 9, 2021 – Rotten Tomato Stocks – As we move into June to close out the standard fiscal quarter for Q2 2021, it’s worth looking back at some of the cannabis sector’s biggest advances and declines over the quarter. Based on factors such as stock price since April 1, 2021, direction of revenues, and other factors such as legal actions and financing records, let’s now take a look at the movement of some of the sector’s players over the last couple months.
Advancers: 22nd Century Group, Inc. (NYSE:XXII) and HEXO Corp. (NYSE:HEXO)
Decliners: IM Cannabis Corp. (NASDAQ:IMCC) (CSE:IMCC), Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED) and Tilray, Inc. (NASDAQ:TLRY) (TSX:TLRY)
Advancer: 22nd Century Group, Inc. (NYSE:XXII)
Emerging as a leading advancer on this list in the sector, 22nd Century Group, Inc. (NYSE:XXII) has been on a roll since April 1, 2021. As shares of the stock were trading at $4.63 on June 4, 2021, overall that represents a +36% gain since the beginning of the standard Q2 2021.
However, the biggest gains took place through the first month in April, when the stock hit a high of $5.74 on April 28th.
Now, the reader could be looking at this and saying “22nd Century is a tobacco company, not a pure-play cannabis stock!”, however, the company’s rhetoric and focus on cannabis has grown considerably over the year.
In its latest financial results release, the company took time to address increasing signs that point towards federal legalization happening in the United States. As well, they went ahead to show they’re uniquely positioned to address the cannabis market’s specific needs in terms of agronomics to scale production to address forecasted demand—and even went so far as to call itself a potential “Monsanto of Cannabis”, through its ability to accelerate the modification of cannabis plants to the highest levels of quality, stability, and scale.
22nd Century announced in early May an agreement to extend and expand its successful plant research partnership agreement with KeyGene, a global leader in plant research involving high-value genetic traits and increased crop yields, with newly developed, disruptive hemp/cannabis plants.
Decliner: IM Cannabis Corp. (NASDAQ:IMCC) (CSE:IMCC)
Since the open of the market on April 1st to June 4, 2021, Israeli-based cannabis firm IM Cannabis Corp. (NASDAQ:IMCC) (CSE:IMCC) has seen its share price drop 34.4% from $7.80 to $5.11.
At the $5.11 level, the stock is already performing at an 11% discount from the company’s $5.75-per-share offering that was offered on May 5, 2021, and subsequently announced to be closed on May 10, 2021, raising $35 million.
The declining price points run against the momentum IMCC championed when it reported record Q1 2021 results. In that round of financials released on May 17th, the company posted an 80% sequential increase from Q4 2020, and gross margin of 53%. Much of the improvement in sales can be attributed to the addition of Canadian revenues, as well as an increase in sales from Germany.
However, despite these seemingly improved financials compared to their year-end results, IM Cannabis Corp. has seen the company’s stock price slide from an $11.40 per share open price on March 3, 2021—a +55% drop in less than 100 days.
Back in April the company stated it expects its Q2 2021 revenues to be in the range of $17-$19 million from continued growth in Israel, resumption of product shipments and growth of revenue in Germany, and the inclusion of Trichome operations in the company’s financial results.
Meanwhile, IM Cannabis Corp. is still in the process of promoting the acquisition of MYM Nutraceuticals Inc. (CSE:MYM) (OTC:MYMMF)—which is scheduled to be determined shortly after a July 5th shareholder meeting. As per the terms of the deal, MYM shareholders will receive 0.022 IMC shares per MYM share, which at the time of the announcement would’ve represented a price of $0.195 based on respective closing prices on March 31, 2021.
However, using today’s prices, 0.022 of an IMC share is only $0.11—representing a more than 43% drop in value since the announcement on April 1, at the very beginning of Q2 2021. The momentum since the proposed transaction’s announcement has dropped off for MYM as well, which as of June 4, 2021 is worth just $0.09.
Prior to the announcement, MYM was near its 52-week high, trading at $0.18 before the news of the transaction correlated with a significant nearly -10% one-day drop. On that day, while MYM went down, and IMCC went up for two trading days before beginning its current downward trajectory.
Further details of IMCC’s interesting valuation was covered in a previous report on Rotten Tomato Stocks.
Advancer: HEXO Corp. (NYSE:HEXO)
Though not a large growth so far, as of June 4, 2021, HEXO is up 1% since April 1, 2021. However, while it’s currently trading at $6.69, the stock has crossed the $7 threshold 5 times in Q2 2021 so far.
However, while the market expects HEXO to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter-ended April 2021, Zacks reports that it still expects the company to post a quarterly loss of $0.05 per share.
In late May, HEXO announced its acquisition of Redecan to create a market leader in adult-use sales. The acquisition was reported to be worth a purchase price of C$925 million payable in cash and through the issuance of common shares of HEXO.
The breakdown of the transaction came in at C$400 million in cash, plus C$525 million in stock. HEXO took on a sizeable debt to fund the transaction, while announcing an offering of $360 million in senior convertible notes due May 1, 2023. Often, convertible type of debt offering, can result in the dilution in the value of existing shares down the road.
Decliner: Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED)
Shareholders of cannabis giant Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED) have witnessed a 26.4% drop in the CGC/WEED share price since April 1, 2021.
However, it’s important to note that Canopy is on a different quarterly schedule than the rest of the companies in this list. As of June 1, 2021, the company had already put out its Q4 2021 and Year-End 2021 financial results.
So despite how the company’s price drop appears, Canopy reported 37% revenue growth across its fiscal year 2021. Over the course of the fiscal year, Canopy Growth transformed into a consumer packaged goods (CPG) modelled organization.
With this shift, the company’s CFO stated their cost savings program is on track to deliver $150-$200 million of savings within the next 18 months.
As well, the company announced the addition of celebrity influencer Martha Stewart as an Official Strategic Advisor. In April, Canopy announced it would acquire The Supreme Cannabis Company in a transaction valued at approximately $435 million on a fully-diluted basis. On April 1, Canopy also announced the completion of the acquisition of AV Cannais Inc. (“Ace Valley”).
The day before the April 1, 2021 quarter start, Canopy announced the addition of Sumayyah Emeh-Edu as Vice President of Diversity, Equity, and Inclusion.
Decliner: Tilray, Inc. (NASDAQ:TLRY) (TSX:TLRY)
The eyes of the cannabis sector were on the mega-merger between Tilray, Inc. (NASDAQ:TLRY) (TSX:TLRY) and Aphria Inc., after it finally closed in early May. However, the combined entity’s newly massive size hasn’t come without its challenges.
After the merger’s closing, Cantor Fitzgerald assigned the new-version of Tilray Inc. with an overweight rating, and downgrading its price target from a pre-merger $30.25 to a $22 price target.
As of June 4, 2021, Tilray shares were trading at $18.80, down nearly 20% from its $23.42 opening price on April 1, 2021 at the start of Q2 2021. For reference, the company was trading as high as $67 in February. Year-to-date shares are up more than 100%.
In a late April release, Tilray was included in the inaugural list of TIME’s 100 Most Influential Companies.
Article Source: Rotten Tomato Stocks
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While all information is believed to be reliable, it is not guaranteed by us to be accurate. The owner/operator of GCL holds no shares of TLRY, ABBV, MO, IMCC, but own shares in MYM Nutraceuticals Inc.. We also reserve the right to buy long, or sell short, any of the stocks mentioned herein, and will buy and/or sell shares in said companies effective immediately. Individuals should assume that all information contained in any of our reports is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.
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