The cannabis sector posted stellar results in 2018, but this year isn’t looking so hot for pot.
Cannabis companies Tilray (TLRY) and Canopy Growth (CGC) both fell this week after posting disappointing quarterly earnings reports — but they’re not the only pot stocks struggling to stay afloat recently.
CannTrust Holdings (CTST) plummeted this week after the sale of over half of its stock of marijuana and around a quarter of its plants had been suspended following Regulator Health Canada’s discovery of unlicensed cultivation at its facilities.
All three stocks saw double-digit losses this week.
Hershal Gerson, the CEO and Managing Director of cannabis insights and solutions company ELLO Capital, told YFi AM that despite the sector’s recent set back, the marijuana market has the potential to grow.
“It's not going to grow in a linear fashion that a lot of investors thought,” Gerson stated. “There's going to be hiccups. There's going to be regulation, setbacks and advances. We still expect the market to continue to grow in a very significant fashion. It's just I think investors got a little bit ahead of themselves as to how quickly that growth was going to come.”
With enthusiasm amongst investors in the cannabis sector dwindling, many companies, according to Gerson, are beginning to regret their hasty initial investments.
"I'm not going to speak to any specific investment or stock, but yes," Gerson explained. "Obviously everybody who invested early invested at valuations that were probably ahead of the market as we're seeing today. We're having a reset in valuation and expectations for revenue growth. We're going to see a related re-valuation of stocks. And that's why we're seeing a decline in the stocks."
Chelsea Lombardo is a production assistant for Yahoo Finance. You can find more of her work here.
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