Please ensure Javascript is enabled for purposes of website accessibility

Why Cronos Group Stock Crashed 9% Today

By Rich Smith - Jan 24, 2020 at 5:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Could this be a delayed reaction to executive departures?

What happened

Late Wednesday night, Canadian cannabis company Cronos Group (CRON 5.83%) filed an 8-K form with the SEC, advising that way back on Dec. 31, both its chief operating officer and its chief commercial officer resigned from the company.  

Now, you might expect that such a late-night revelation, combined with the company waiting so long to reveal it at all, might not have gone over well with Cronos' shareholders. You might even have expected some of them to be sufficiently upset to sell the stock -- but that didn't happen. In fact, once trading resumed on the Nasdaq Thursday, Cronos stock hardly budged, actually closing the day up $0.01 a share.

But no such luck on Friday.

Wilting marijuana plants

Image source: Getty Images.

So what

Perhaps it just took investors a few hours to react to the news, but on Friday, it appears people finally did -- and Cronos stock closed the day down 9.2%.

Whether they reacted to the news itself, or perhaps to specific details (such as the fact that the two execs departed the company with combined severance payments in excess of half a million Canadian dollars), or to the fact that Cronos disclosed these departures in an SEC filing and never issued a press release to its investors, isn't clear.

Now what

What does seem clear is that, now that investors have finally heard the news, they're not happy about it.

With Cronos stock down nearly 48% over the last 52 weeks -- still unprofitable, still making revenue of less than $27 million annually (resulting in a price-to-sales ratio of nearly 100), and now, management apparently jumping ship in pairs (if not yet droves) -- they may have even less to be happy about in the quarters to come.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cronos Group Stock Quote
Cronos Group
CRON
$3.27 (5.83%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.