Back to top

Image: Bigstock

Can Bill Hopes Relieve Earnings-Induced Pain in Pot ETFs?

Read MoreHide Full Article

Last week was packed with marijuana earnings and hardly any company was able to impress investors. In any case, marijuana stocks have been under pressure of late following Canadian grower Hexo’s (HEXO - Free Report) lowering of its fourth-quarter revenue forecast and withdrawal of its fiscal 2020 outlook (read: Top & Flop ETFs Halfway Through Q4).

On Oct 28, Hexo reported net losses about 57 million Canadian dollars for the quarter compared with 7.8 million in the prior quarter. Losses were three times wider than analysts’ estimates.

If this was not enough, Hexo said that it would roll back a planned product launch in the United States and said new derivative products would come online within the first half of next year, behind rivals.

In such a downbeat scenario, all eyes were on the earnings reports of other industry biggies. And this did not go well. Below we highlight some of the key results from last week (read: Should You Buy the Dip in Marijuana ETFs Ahead of Earnings?).

Inside Marijuana Earnings Releases

Last week, industry behemoth Canopy Growth (CGC - Free Report) came up with a quarterly loss of 82 cents per share versus the Zacks Consensus Estimate of a loss of 27 cents. This compares to loss of 76 cents per share a year ago. Revenues of $58.03 for the September quarter million fell short of the Zacks Consensus Estimate by 24.73%.

Tilray (TLRY - Free Report) came up with mixed results. It reported a quarterly loss of 50 cents per share versus the Zacks Consensus Estimate of a loss of 29 cents. This compares to a loss of 8 cents per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a negative earnings surprise of 72.41%. A quarter ago, it was expected that this company would post a loss of 23 cents per share when it actually produced a loss of 32 cents, delivering a negative earnings surprise of 39.13%. Tilray posted revenues of $51.10 million for the quarter ended September 2019, surpassing the Zacks Consensus Estimate by 3.05%. This compares to year-ago revenues of $10.05 million.

Cronos Group (CRON - Free Report) too reported mixed results. Its quarterly loss of 2 cents per share was narrower than the Zacks Consensus Estimate of a loss of 3 cents. This compares to loss of 3 cents per share a year ago. Cronos posted revenues of $10.10 million, missing the Zacks Consensus Estimate by 3.05%. This compares to year-ago revenues of $2.88 million.

Aurora Cannabis Inc. (ACB - Free Report) came up with quarterly earnings of a penny per share, beating the Zacks Consensus Estimate of a loss of 3 cents per share. This compares to earnings of 9 cents per share a year ago. Aurora Cannabis recorded revenues of $57.02 million, falling short of the Zacks Consensus Estimate by 21.69%.

Aphria Inc. (APHA - Free Report) reported break-even quarterly earnings per share versus the Zacks Consensus Estimate of a loss of 3 cents. This compares to earnings of 7 cents per share a year ago. Aphria’s revenues of $95.53 million were also shy of the Zacks Consensus Estimate by 7.05%. This compares to year-ago revenues of $10.15 million.

Bloodbath in Marijuana ETFs

Marijuana ETFs lost in the range of 12% to 18.2% last week. AdvisorShares Pure Cannabis ETF (YOLO - Free Report) (down 12%), Cambria Cannabis ETF (TOKE - Free Report) (down 12.8%), ETFMG Alternative Harvest ETF (MJ - Free Report) (down 14.5%), Amplify Seymour Cannabis ETF (CNBS - Free Report) (down 14.7%), Cannabis ETF (THCX - Free Report) (down 15.8%) and Global X Cannabis ETF (POTX - Free Report) (down 18.2%) all lost in double digits last week.

Marijuana to Get Back Its High?

In such an awful earnings scenario, the marijuana space turned around on Nov 18 on bill hopes. The market was abuzz with speculation that a congressional committee looks to discuss “legislation aimed at ending the federal prohibition of marijuana.” The bill is talked to be limiting restrictions on licensing and employment in the industry.

The biggest marijuana fund MJ was up 3.5% on Nov 19 through POTX was the highest gainer (up 4.8%). Other funds added in the range of 2.1% to 4% (read: Top & Flop ETFs of Last Week).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Published in