Shares of Cronos Group (CRON -2.33%) 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.
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.