Shares of Cronos Group were punished by investors this week after the Ontario-based licensed producer of cannabis was targeted by short-seller Andrew Left of Citron Research – but at least one analyst called the wild swing “overdone.”

Citron’s report, issued Aug. 30, accused the Cronos management team of “deceiving the investing public” by not disclosing the size of its distribution agreements with provinces.

The report, which did not cite its sources, claimed “the agreements are so small they could never justify the premium investors are paying for the stock.”

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The report also accused Cronos of securities fraud for failing to disclose the recall of a 1-kilogram batch of medical marijuana from the German market last spring.

Shares of Cronos fell 30% on Aug. 30 before rebounding 10% as of 10:30 a.m. ET the following day.

Its shares had skyrocketed about 90% between Aug. 17 and Aug. 29.

GMP Securities analyst Martin Landry pointed out several flaws in Citron’s report.

In a note to investors, Landry called the Citron report “unfounded and biased.”

“We would observe that while some publicly traded LPs have disclosed volumes, these volumes represent internal allocations rather than fixed commitments,” the note continued.

In fact, Cronos announced one of the largest guaranteed supply deals to date in Canada – a five-year “take or pay” supply agreement with Cura Select Canada to purchase a minimum of 100,000 kilograms (220,462 pounds) of cannabis over a five-year period.

Landry said the bottom line is that the stock reaction “appears significantly overdone.”

It’s not the first time Citron has targeted a Canadian cannabis company.

In January, the firm warned investors of Aurora Cannabis’ “Enron-type accounting,” calling the Alberta-based licensed producer “the weakest player in the space.”

Aurora’s shares have lost about 25% so far this year.

Cronos is traded on the Toronto Stock Exchange and the Nasdaq under the ticker symbol CRON. Aurora’s shares are traded on the TSX as ACB.

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