What happened
Shares of marijuana producer Cronos Group (CRON -0.42%) are plunging 13% as of 10:42 a.m. ET on Tuesday after it reported earnings that beat Wall Street projections on bottom-line losses but missed analyst revenue estimates.
Cronos reported revenue of $23.1 million, a 48% increase from last year, but well below expectations of $28 million. Losses for the second quarter were $44.6 million, or $0.05 per share, dramatically better than the $165.5 million, or $0.48 per share, it lost in the year-ago period. It also beat analyst estimates for a loss of $0.06 per share.
So what
Cronos sells marijuana in Canada, Australia, Germany, and Israel but has focused particularly on the latter in more recent periods as it continues to see strong growth in the market. Revenue from Israel more than tripled over the past year, reaching $7.2 million, or 31% of Cronos' total revenue.
The pot stock is still positioning itself for the U.S. market to concentrate its efforts on the adult-use market with a specific focus on the direct-to-consumer market. Now that it has taken the tack of directing sales of cannabis brands and developing rare cannabidiols (CBDs) for scientific purposes, making a name for itself in any particular market could distinguish it from the competition.
Now what
The market doesn't quite see it that way after this latest earnings report, which shows it's still difficult for marijuana stocks to make a profit or grow sales meaningfully. Investors are not liking the prospect of ongoing operating losses as far as the eye can see.
