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by Stockwatch Business Reporter
The S&P/TSX Cannabis Index lost 6.69 points to 101.09 Wednesday, while the Canadian Securities Exchange Composite Index fell 16.79 points to 218.31. Yesterday, after the market closed, Cronos Group Inc. (CRON) announced that it would be reducing its previously stated revenue in the first and third quarters of 2019. Today, Cronos dropped 28 cents to $8.17 on 3.7 million shares. For the first quarter of 2019, Cronos will reduce revenue by $2.5-million, while it will reduce revenue by $5.1-million for the third quarter. (Cronos reported net revenue of $6.4-million in Q1 and $12.7-million in Q3.) The cannabis producer did not get overly specific with why the reductions were necessary, a noticeable omission given that it cut about half of its revenue. It just said that the adjustments "eliminate certain transactions through the wholesale channel."
Compared with similar-sized competitors (such as Canopy Growth Corp. (WEED: $14.14), Aurora Cannabis Inc. (ACB: $0.90) and Aphria Inc. (APHA: $3.04)), Cronos's revenue lags far behind. Still, there is little reason for concern, at least not yet. Cronos's value is as high as it is in part thanks to a $2.4-billion investment from tobacco giant Altria Group. The investment has given the company a couple of things: (1) significant cash, with cash and cash-equivalents at $1.47-billion as of Sept. 30, 2019; and (2) access to expertise with vaping products.
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