Investors who follow marijuana stocks noted two Canadian companies whose tickers were moving in opposite directions Wednesday. Cronos Group (NASDAQ:CRON) notched an impressive 10.9% gain, while Aurora Cannabis (NYSE:ACB) was down 1.8% on the day. Cronos investors celebrated, but if you have ACB stock in your portfolio, there’s no need for panic.
Cronos stock got a big boost from bullish analyst reaction to the company’s announcement it would be pursuing an aggressive launch of CBD products in the U.S. market. For Aurora stock, Wednesday’s drop was a continuation of six months of volatility that still has the company up some 47% in 2019.
That being said, yesterday’s close of $7.53 is a long way off from last fall, when ACB stock nearly hit $11.
What’s the Deal With Cannabis Companies, and Why Are So Many Canadian?
Canada became only the second country (and the first member of the G7) to legalize recreational marijuana use when Bill C-45 passed in June 2018. The legal status in Canada is a key reason why so many of the top cannabis companies are based in that country — and Aurora stock is one of those Canadian top performers. While medical marijuana is a relatively mature product, recreational cannabis is a new market and that means there are bound to be some ups and downs.
However, with the current trend toward legalized recreational pot (and related products like the CBD that has CRON investors excited), many analysts think the future is bright for these Canadian cannabis producers.
What Does the Future Look Like for ACB Stock?
The trajectory of Aurora Cannabis stock closely follows that of the cannabis industry in general. Worth pennies in 2014 when the company first obtained a license to grow and sell medical marijuana, it has steadily increased in value with the march to legalize recreational pot use.
ACB stock hit all-time highs (no pun intended) last October as investors rushed to get onboard in the months after Canada legalized recreational marijuana, with anticipation that multiple states were on the verge of doing the same as a part of midterm election ballots. In December, three states did just that (Michigan, Utah and Missouri), bringing the number of states that allow recreational marijuana use to 10. There are even hopes that the U.S. might legalize pot at the federal level. If that were to happen, Canadian cannabis producers would have a head start, with industrial-scale marijuana growing facilities already in production.
Aurora stock has experienced some volatility in recent months due to a variety of factors. Its Q3 earnings report delivered a loss that was 724% higher year-over-year, while the Canadian recreational cannabis market has significantly missed expectations so far for 2019.
However, despite the current setbacks, in Canada — which include the challenge of ramping up production, supply chain challenges, delays in retail store openings, and the continued availability of cheaper “black market” pot — the future looks bright for recreational marijuana. In addition, momentum is building in U.S. states, legalization is likely to happen in Mexico this year and countries on all continents are considering decriminalization of marijuana.
Aurora Cannabis has been making the investments needed to be a major producer in both the medical and recreational marijuana industries, in Canada and abroad. With the demand for cannabis accelerating and in the early stages of its expected growth curve, the latest ACB stock drop should not be cause for concern.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
More From InvestorPlace
The post Aurora Stock Slips, But Volatility Doesn’t Mean 2019 Growth Is Over appeared first on InvestorPlace.