Tuesday 29 September 2020

Cronos stock price is struggling over the year

Marijuana companies are trying to be profitable. The marijuana market is one the quickest growing markets in the world.

Compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment’s lifespan.

The marijuana market has a compound annual growth rate (CAGR) of 28.02% between 2020 and 2025. The USA cannabis market is expected to grow at its own CAGR of 17% until 2025, according to New Frontier Data.

Marijuana still seems to be a Schedule 1 drug under USA federal law (drug, substance, or chemical with no currently accepted medical use and a high potential for abuse). However, Canadian companies are hoping to expand consumer bases in USA state markets where marijuana is legal.

Toronto-based Cronos Group (NASDAQ:CRON) is certainly trying to expand and extend its reach. This excited investors last year: its deal with the maker of Marlboro and Black & Mild brands, Altria Group (NYSE:MO).

Cronos can be compared to other similar companies. Cronos has a market cap of $1.8 billion - higher than Canadian peer Aphria's (NASDAQ:APHA) cap of $1.3 billion. For the full fiscal year 2020, Aphria had an increase in revenue of 129% year over year to 543.3 million Canadian dollars.

However, Cronos only earned net revenue of $8.4 million in the first quarter and $9.9 million in the second quarter of fiscal 2020. This brings the total to $18.3 million for the first six months (ended June 30).

Cronos market share could be increased in the future.

Cronos Group is an innovative global cannabis company. It was founded in 2013. Its international production and distribution is across 5 continents. The company helps advance cannabis research, technology and product development.

Cronos Group is building an impressive brand portfolio. The portfolio includes Peace Naturals (a global health and wellness platform). 2 adult-use brands are Cove and Spinach. 2 hemp-derived CBD brands are Lord Jones and Peace. Cronos Group owns and operates brands in the business of marijuana cultivation and distribution.

The company name sounds almost like (not to be confused with) Cronus (that's from Greek mythology). Cronus was the son of Uranus (Heaven) and Gaea (Earth), being the youngest of the 12 Titans. Later, Zeus was born.

Other companies are investing into Cronos. For example, Altria is diversifying beyond USA tobacco. Adult cigarette smoking rates in USA are now at an all-time low these days. By investing in Cronos, Altria creates more revenue opportunities. Altria seems to know what USA smokers want.

Cronos Group Subsidiaries:

Zeus Cannabinoids, LLC
Cronos Growing Company Inc.
OriginalBC Ltd
Cronos Australia

1 comment:

  1. Countries that have legalized medical use of cannabis include Argentina, Australia, Barbados, Brazil, Canada, Chile, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Finland, Germany, Greece, Ireland, Israel, Italy, Jamaica, Lebanon, Lithuania, Luxembourg, Malawi, Malta, the Netherlands, New Zealand, North Macedonia, Norway, Peru, Poland, Portugal, Rwanda, Saint Vincent and the Grenadines, San Marino, Sri Lanka, Switzerland, Thailand, the United Kingdom, Uruguay, Vanuatu, Zambia, and Zimbabwe. Others have more restrictive laws that allow only the use of certain cannabis-derived pharmaceuticals, such as Sativex, Marinol, or Epidiolex. In the United States, 36 states, 4 territories, and the District of Columbia have legalized the medical use of cannabis, but at the federal level its use remains prohibited.