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Shares of Cronos Group (NASDAQ:CRON) sank 15.9% on Thursday, following the marijuana producer’s disappointing second-quarter results.
Cronos Group’s net revenue climbed 29% year over year to $9.9 million. The gains were driven by the launch of cannabis vaporizers in Canada, as well as sales of Lord Jones cannabidiol (CBD) products, a brand Cronos acquired in September. Still, these results fell short of analysts’ estimates, which had called for revenue of $12.7 million.
Cronos Group’s stock plummeted on Thursday. Image source: Getty Images.
Moreover, Cronos generated an adjusted operating loss of $31.3 million, compared to a loss of $16.8 million in the prior-year period. Lower cannabis prices, inventory writedowns, and coronavirus-related expenses all contributed to the company’s losses.
The cannabis industry is dealing with a host of challenges, including COVID-related retail store closures, regulatory hurdles, and a persistently strong black market. Thanks to Altria‘s $1.8 billion investment back in December 2018, Cronos Group fortunately has the cash to weather this downturn. The cannabis company ended the second quarter with more than $1.3 billion in cash and investments. But until Cronos Group finds a way to produce cash rather than burn through it, its stock will likely continue to languish.
Joe Tenebruso 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.”>