Please ensure Javascript is enabled for purposes of website accessibility

Why OrganiGram Holdings Shares Are Sliding Today

By Keith Speights – Jul 6, 2020 at 11:34AM

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

Investors didn't like what they heard during the Canadian cannabis producer's announcement on Friday.

What happened

Shares of Organigram Holdings (OGI -0.96%) were sliding 4.9% lower as of 11:18 a.m. EDT on Monday after falling as much as 13% earlier in the day. The decline appeared to be the result of an announcement OrganiGram made on Friday (when U.S. stock markets were closed). The Canadian cannabis producer stated that it had cut around 25% of its total workforce and expects revenue in the third quarter will be lower than in Q2.

So what

OrganiGram's Q2 results were pretty bad. Investors are now bracing for an even worse Q3 update later this month. Why is OrganiGram expecting lower net revenue yet again? The company said on Friday that its Q3 results were "impacted by insignificant wholesale revenue being recorded in the quarter."

Hand holding white bag with green cannabis leaf printed on it

Image source: Getty Images.

There could be some good news in OrganiGram's Q3 results, though. The company expects selling, general, and administrative expenses will be lower in Q3 than in Q2. It remains to be seen, however, if those lower expenses will be enough to offset lower revenue.

OrganiGram's changes reflect a new reality for all Canadian marijuana stocks. Current market conditions aren't what companies expected when they significantly ramped up production capacity over the last couple of years.   

Now what

Just how ugly OrganiGram's Q3 results are will be revealed soon. The company's Q3 update is scheduled for July 21, 2020. This is nearly one week later than originally planned. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. 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

OrganiGram Holdings Stock Quote
OrganiGram Holdings
$0.89 (-0.96%) $0.01

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

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.