The story that made the biggest headline yesterday in the up-and-down world of the Canadian pot market was CannTrust Holdings Inc (TO:TRST). Its stock price took a drubbing, losing about 19 percent by the time the markets closed. Ouch!
Was it all a market overreaction to its fourth-quarter results that were unveiled before the opening bell yesterday? Will the stock recoup some of its losses today? These are the questions everyone is looking at today. In the U.S., the stock (NYSE:CTST) was still heading south today.
So why did the markets react so decisively yesterday.
One reason is that the fourth-quarter results covered the first period since marijuana was legalized in Canada last October. And in that time, CannTrust reported a 132-percent jump in revenues, compared with the same period the previous year. But it also recorded a net loss of $25.5 million for the period. And that translated into a loss of 26 cents per share compared with $6.3-million profit – or 8 cents a share – in the fourth quarter of 2017.
Analysts reportedly were looking to see a 4-cent-per-share loss.
One thing to keep in mind is how the roll-out of legalization of pot has had a few problems. Notably, the biggest one being getting the product to the government-licensed retailers. And this includes government-run and private retail outlets. There is still a lot of what is being termed “structural” hurdles to getting the product into the hands of consumers. And this is not necessarily an indication of any one company's performance.
These issues are being addressed. But how quickly? And, again, all eyes will be looking at the next quarter. But will investors hang on for the ride?
No one said the path to a new emerging market was going to well paved.