Please ensure Javascript is enabled for purposes of website accessibility

Why Cronos Group Stock Is Tumbling Today

By Keith Speights – Feb 24, 2020 at 12:12PM

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

That Q4 update planned for later this week? It's not happening.

What happened

Shares of Cronos Group (CRON -1.66%) are falling today, down 7.6% as of 11:24 a.m. EST after dropping as much as 11% earlier in the session. The decline came in the wake of the Canadian cannabis producer's announcement that it was delaying its fiscal 2019 fourth-quarter and full-year update that was previously scheduled for Feb. 27, 2020.

So what

Cronos said that the postponement of its Q4 update stemmed from "a delay in the completion of its financial statements." That's certainly embarrassing for the company. Cronos gets to set the date for when it releases quarterly results. You'd expect that the company would be able to determine how much work is required and schedule its update accordingly.

Falling stock charts superimposed over digital map of the world

Image source: Getty Images.

At this point, though, there's no reason to make more out of the Q4 update delay than what it seems to be on the surface -- an unforced error by Cronos' accounting team. The company didn't reveal any details that would hint at bigger problems with its fourth-quarter and full-year reporting.

Of course, Cronos does face some bigger problems. It continues to lose money. Don't let the big net income figure from the company's Q3 results fool you. It stemmed entirely from revaluation of warrants and antidilution rights issued to Altria -- and that revaluation was due to Cronos Group stock falling. In addition, Cronos' revenue hasn't been growing as rapidly as investors expected it would.

Now what

Cronos hasn't said yet when it will issue its Q4 update but plans to make another announcement when the date has been set. In the meantime, the dynamics that all Canadian marijuana stocks face will still apply to Cronos, including an improving but still slowly expanding retail infrastructure in Ontario and the uncertain pace of the ramp-up for the Canadian cannabis derivatives market.

Keith Speights 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.

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 Inc. Stock Quote
Cronos Group Inc.
CRON
$2.96 (-1.66%) $0.05

*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 analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

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.