Government aid is still not on the cards for cannabis companies, so investors are looking at the balance sheets for cash. At the same time, the majority of banks don’t offer loans to the cannabis industry. Since the outbreak of the coronavirus pandemic, overseas cannabis companies are converting and relying on delivery, ordering cannabis online with all innovative aspects from app to drone.

Over the last week, cannabis shares have achieved really good gains and the main reason for this was the quarterly reports issued by Tilray and especially Aurora Cannabis. The latter started the week with a stock split, exchanging ten hemp stocks for a new one.

Current developments on the cannabis market

Since the beginning of the coronavirus pandemic, many cannabis companies are converting and relying on deliveries. Selling cannabis online involves innovative aspects, from apps to drones.

However, in many places there are also problems with logistics, the staff is sick or in quarantine and even though the quarterly reports look good, reduced sales could tear a large hole in the balance sheets of cannabis stocks.

In addition, the management of cannabis companies is under pressure. For example, at Canopy Growth two top people have just left the company. Of course, analysts don’t know in detail whether this was due to different views on the growth of the cannabis business – or the inability to save, reduce costs, and acquire new sources of funding for the chronically depressed cannabis companies in the USA and Canada.

Government aid is still not on the cards, so investors are looking at the balance sheets for cash. At the same time, the majority of banks don’t offer loans to the cannabis industry, so everything must always be paid in cash. This attracts quite a few thieves, even if their actions mainly affect local cannabis shops, rather than the big manufacturers and blue chips on the stock exchange.

The cannabis industry is still under pressure and the rosy reports for the first quarter are probably just a piece of information from the past with little meaning for the future. Only the steady demand from cannabis consumers and hemp patients remains unchanged.

The marijuana index and performance of cannabis stocks

As already mentioned in the beginning, investors in cannabis stocks were pleased about a good bump in the week that just ended. Overall, North American stocks often rose by double digits, and the volume of day trading, especially of large companies, increased significantly.

The USA, which has lacked news this week, gained a good four percent per cannabis share on the stock exchange, which is not bad in view of the price decline that has been going on for several months.

Investors should remain cautious when investing in cannabis companies

Canopy Growth rose, like most cannabis stocks, but the gains weren’t that impressive. The stock showed no relative strength and rose from $13 to $15 (€12 to €14), which is a lot, but little compared to the overall market.

Aurora Cannabis sales increased to $53.4 million (CAD75 million), but the gross profit decreased by half, which reflects the high costs. Per total, Aurora recorded a loss of about $99.7 million (CAD 140 million).

Tilray: the loss per share of $1.73 is a good six times higher than expected! Cannabis products of Tilray were converted in the first quarter at a value of somewhat more than $50 million. In addition, the company trails estimates; sales increased clearly in relation to the previous year, but only marginally.

Aphria: Initially, its shares price fell again below the $3.25 (€3) mark, but then there was a rise in the slipstream of the Aurora figures. Consequently, investors are cautious when betting on this cannabis company.