Demand in the new year for marijuana stocks has been strong, as investors seek to rebound from their losses in 2018. That has many cannabis companies looking to make their shares more readily available to investors in the U.S. market.
Last year, several up-and-coming players in the cannabis space listed their shares on U.S. stock exchanges, either through dual listings in addition to their already-public shares on Canadian exchanges or by going straight to an initial public offering in the U.S. Today, Canadian cannabis producer CannTrust Holdings (CNTTF +0.00%) became the latest marijuana stock to seek a place on the New York Stock Exchange. By doing so, the company hopes to draw more attention in an increasingly crowded space for marijuana-related businesses.
Image source: Getty Images.
What CannTrust said
In a press release, CannTrust simply stated that it has applied to list its common shares on the New York Stock Exchange. The listing request is subject to approval of the exchange, and CannTrust will have to meet all the listing requirements in order to have its shares offered there. Among those requirements is filing a registration statement with the U.S. Securities and Exchange Commission, which the company has done. Although CannTrust didn't predict when it will first trade on the NYSE, it committed to doing so once it's gotten all the approvals it needs to move forward.
CannTrust sees the value of a NYSE listing both for its reputation and for access to capital. In CEO Peter Aceto's words, "CannTrust has firmly established itself as one of the top licensed producers in Canada, with a global platform rooted in trust, science, and innovation. A listing on the NYSE is a natural step forward in our evolution as we look to broaden our investor base, increase the Company's exposure, and expand our business on an international scale."
Late to the game?
Some detractors will argue that CannTrust took longer than it needed to before making this move. After all, several other companies were quicker to get themselves listed on U.S. exchanges:
|
Company |
Market Cap |
First Trade Date on NYSE/Nasdaq |
|---|---|---|
|
CannTrust |
$573 million |
TBD |
|
Aurora Cannabis (ACB 0.59%) |
$5.24 billion |
October 2018 |
|
Aphria (APHA +0.00%) |
$1.60 billion |
November 2018 |
|
Cronos Group (CRON 0.37%) |
$2.22 billion |
February 2018 |
|
Canopy Growth (CGC 1.83%) |
$9.84 billion |
May 2018 |
|
Tilray (TLRY +0.00%) |
$6.7 billion |
July 2018 |
Data source: Yahoo! Finance. Uses $1 = CA$1.3311 exchange rate.
Admittedly, those rivals all have much larger market capitalizations than CannTrust does. Yet from a revenue perspective, CannTrust is well ahead of Cronos and has top-line figures approaching those of Tilray and Aphria.
Others might criticize CannTrust for bad timing, since its stock is down more than 30% over the past year as measured by its Canada-listed shares. Yet those declines are consistent with what several other players in the space have suffered, and a solid gain so far in 2019 points to the potential for a longer-term rebound.
The benefits of the NYSE
One thing that CannTrust hopes to achieve from the listing is more visibility and trading liquidity. Currently, CannTrust's over-the-counter shares in the U.S. have seen average daily volume of around 370,000 shares, or less than $2 million. That's far less than the 3 million to 14 million share trading volume that previously listed stocks enjoy -- and with much higher share prices, some of those stocks see volume of several hundred million dollars each and every day.
CannTrust has several growth opportunities it wants investors to see. Moves like the opening of its expanded Niagara greenhouse facility, new brands of recreational cannabis products, and the naming of Aceto as CEO have set the stage for a promising future for the business. Now, the company is looking to push forward, and a NYSE listing could be the catalyst to a host of further strategic moves.
Pick your marijuana stocks well
It used to be that investors in cannabis had to settle for the few stocks they could get their hands on. But as more companies like CannTrust become more easily available to U.S. investors, you can afford to be more discriminating. By focusing on the best marijuana stocks in the market, you'll have the best chance to take full advantage of the profit opportunities available in the cannabis industry right now.
Check out the latest CannTrust Holdings earnings call transcript.
