What happened

Cannabis stocks that performed well on Friday last week took a turn for the worse Monday. As of 1:33 p.m. ET, shares of Sundial Growers (SNDL -2.01%), Green Thumb Industries (GTBIF -0.78%), and Aurora Cannabis (ACB -2.71%) all headed south for the winter, down 2.5%, 5%, and 5.4% as of 1:35 p.m. ET.

A fourth cannabis stock -- Canopy Growth (CGC -2.95%), now down 11% on negative news from Wall Street -- appears to have provided the catalyst for the sell-off. But as it turns out, investors may be reading too much into its bad news.

Chalkboard drawings of a marijuana leaf with accompanying stock, bar and pie charts.

Image source: Getty Images.

So what

Consider: Canopy Growth stock sold off today after analysts at investment bank Piper Sandler said it was losing market share. And yes, that's a problem for Canopy Growth, but the question investors might want to be asking right now is "losing market share to whom?"

Because if Canopy is losing sales to somebody, then it stands to reason that some other cannabis company or companies are picking up those sales, right? I mean, sure, Piper Sandler didn't come out and tell us who's winning where Canopy Growth is losing, but it might be one of Sundial, Green Thumb, or Aurora. And if that's the case, then selling off these stocks on one of their rivals' bad news wouldn't make a lot of sense.

Now what

A second trend that bears watching is the direction in which marijuana prices are moving. That will clearly affect how profitable the business is for anyone who's able to grab sales away from Canopy Growth -- and in this regard, the news is somewhat positive.

Steep declines in marijuana prices over the past couple of months appear to be moderating of late. According to Cannabis Benchmarks' U.S. Cannabis Spot Index, a pound of cannabis cost a little over $1,400 in late October, and had fallen below $1,300 a pound by late November. Prices regained some strength in December, however, and were recently spotted back above $1,300 a pound.

Granted, that's still a sizable 7% drop in two months. But on the bright side, if prices stop dropping, then this, too, would be relatively good news for cannabis companies. It might not be enough to turn all of the marijuana companies profitable. But for a company like Green Thumb, for example, which is already profitable, a stabilization in prices plus the potential to pick up some market share from weaker players could be just the thing to get stock prices moving higher again.