USA NEWS GROUP MARKET COMMENTARY
Vancouver, BC – April 16, 2021 – USA News Group – The marijuana industry is a budding sector that is increasing rapidly as more companies become public in the U.S. and Canada, but some of them are overvalued and can be attractive to short sellers. While investors are drawn to the industry, there are too many players, which can create a lot of ‘white noise’ out there; there’s definitely a seasonality with pot stocks and come April, the liquidity usually drops off a cliff into the summer and generally speaking, that could be a good entry point.
Here are three marijuana stocks with recent published commentary to be aware of:
Sundial Growers (NASDAQ: SNDL) Barron’s reported “Sell Sundial Growers, Analyst Says. The Cannabis Stock’s Price Doesn’t Match Fundamentals.” Among companies with a market cap of at least $2 billion, data from Finviz shows that Canadian marijuana stock Sundial Growers has a high short percentage, relative to its float. had 166,390,000 shares are held short as of March 15, 2021 or about 10.07% of float currently held short. Canaccord on March 19, 2021 downgraded Sundial to a SELL. Sundial has been falling since February 10, 2021 from a high of USD$2.95 to the current price of ~USD$0.98. BMO Capital Markets downgraded Sundial to Underperform on March 10, 2021.
IM Cannibis (NASDAQ: IMCC) was recently profiled by Rotten Tomato Stocks (RTS) who found the valuation of USD$358 million suspect. They went further to outline the company has three class action lawsuits against them and there may be some controversy over one of their bigger assets, an Israeli marijuana license. IMCC share price in March alone dropped 30% from an intraday high of USD$11.63 on March 3, 2021 to a closing price of USD$7.125 on March 31, 2021. The stock price has continued to decline in April so far.
Tilray (NASDAQ: TLRY) Canadian weed manufacturer, is overvalued, Jason Spatafora of Marijuanastocks.com says the Canadian weed manufacturer’s meteoric rise was due to its share structure. “Every quarter there was another 60 million shares entering the market and diluting the value of the current shares,” he says. After its initial public offering last July, the price of the shares rose to $300, with interest from enthusiastic investors. “Tilray will never see $100 again,” Spatafora says. It’s a good company, but not worth a billion dollars.” The company reported a first-quarter net loss of $30.3 million on revenue of $23 million. Since November 2020 four analysts have downgraded Tilray and the share price has followed in a downward trend. Since February 10, 2021 it has declined from a high of USD$63.91 to the current price of USD$19.84. Steady insider selling has not helped the share price either.
In a booming industry like marijuana, there’s no need to make life complicated. Own the clear winners, not the struggling turnaround stories.
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