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Shares of Cronos Crew (NASDAQ:CRON) were sinking 13.7% decrease as of three: 10 p.m. EST on Tuesday. There were two components contributing to this decline.
First, Cronos announced that it filed for a 15-day extension with the U.S. Securities and Trade Price (SEC) for submitting its annual represent for 2019. Cronos printed final week that it changed into delaying its 2019 fourth-quarter and entire-twelve months change, which changed into in the origin scheduled for Feb. 27.
2nd, fellow Canadian cannabis producer Tilray (NASDAQ:TLRY) announced disappointing fourth-quarter results after the market closed on Monday. Merchants likely concluded that Cronos will potentially present disappointing news of its dangle whenever it in the waste delivers its Q4 change.
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Cronos Crew acknowledged its prolong in announcing Q4 results is thanks to “a continuous evaluate by the Audit Committee of the Company’s Board of Directors, with the help of out of doors counsel and forensic accountants, of loads of bulk resin purchases and sales of products by plot of the wholesale channel and the appropriateness of the recognition of income from these transactions.” It is now now not known yet if this evaluate would require Cronos to restate results for earlier quarters.
Any prolong in filing its annual represent to the SEC and providing an change to merchants is embarrassing for Cronos. Nevertheless except there are some main components stumbled on in the evaluate, the postponement will dangle to handiest be a transient topic for the corporate.
One of the headwinds Tilray confronted in the fourth quarter can also listing up when Cronos provides its Q4 change. In utter, the inadequate series of retail cannabis stores in Ontario hurts both companies. Alternatively, Tilray’s substitute model is tremendously diversified from Cronos Crew’s attributable to Tilray’s acquisition of Manitoba Harvest. As nicely as, now not like Tilray, Cronos has a fundamental accomplice with deep pockets in Altria.
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There is no guarantee that Cronos Crew will in point of fact file its annual represent to the SEC and provide a Q4 change at some stage in the subsequent 15 days. At this level, it stays uncertain exactly when the corporate will entire its accounting evaluate.
Within the intervening time, Cronos stock is probably going to be extremely unstable. The coronavirus outbreak has weighed on the final market, flattening marijuana stocks alongside the potential. Even supposing there might well maybe be lawful news on the horizon with Ontario issuing new licenses for retail cannabis stores and the Cannabis 2.0 market deciding on up steam, it’ll be about a quarters sooner than Cronos advantages from these trends.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.