Please ensure Javascript is enabled for purposes of website accessibility

Cronos Group Slides on Q4 Results

By Eric Volkman - Feb 26, 2021 at 7:00PM

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

The company's mixed quarter saw it trounce revenue estimates, but fall short of profitability forecasts.

Cronos Group (CRON 1.42%) ended the week on a down note after it released a set of quarterly results revealing a steep net loss.

For the Canadian marijuana company's fourth quarter of 2020, net revenue came in slightly over $17 million, well above the nearly $11.4 million of the preceding quarter, and a robust 133% higher than the Q4 2019 result. The latest top-line number also comfortably exceeded the average analyst estimate of $13.8 million.

Hand holding a marijuana cigarette.

Image source: Getty Images.

Alas, the story was far different on the bottom line. The company's net loss was nearly $112 million ($0.31 per share), a dramatic change from last quarter's profit of $68.5 million, and the Q4 2019 profit of almost $61.6 billion. Analysts were expecting a per-share net loss of only $0.06. No wonder the share price went south.

Cronos attributed its revenue growth principally to growth in recreational cannabis sales in Canada. While the U.S. is still a relatively small market for the company, its cannabidiol (CBD) brand Lord Jones helped push sales in the country 30% higher.

On the negative side, pricing pressures in its native Canada (where the black market is pushing prices down) forced Cronos to book a $15 writedown on cannabis flower and extracts during the quarter. The company's focus on research and development, while possibly beneficial in the long term, pushed such costs 31% higher to over $40 million.

Although losses are common in the marijuana industry, this one was rather dramatic and investors did not appreciate it. Cronos stock fell by nearly 3.2% on Friday, a steeper fall than the S&P 500's 0.5% slip.

 

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
$2.86 (1.42%) $0.04

*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
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

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.