July 10, 2013

Medical Cannabis Stocks Socked in Second Quarter as Public Firms Fail to Gain Traction

MarijuanaStocks

Medical marijuana stocks continued to struggle in the second quarter despite increasing optimism over the industry’s future, underscoring the risky nature of cannabis investments and the sector itself.

The share price of nearly every publicly traded company involved in the cannabis space fell or was flat from April through June – with a handful of stocks plunging between 40% and 50% – despite gains in the broader stock markets over the same period. Most stocks are also down for the entire year as well.

The disappointing results reflect the challenges publicly traded cannabis companies face in growing revenues and profits, attracting investors and creating a viable business model. Mainstream investors also are still wary of the risk-heavy sector and the relatively few companies that offer shares to the public.

Several other factors are at play:

– Despite marijuana’s strong momentum across the country (several states are on the verge of passing MMJ laws, while a few new markets are on tap), turbulence in California is affecting several companies that provide cannabis-related products and services to cannabis operations in the nation’s largest MMJ market. That’s cast a pall over the entire industry.

– Publicly traded cannabis companies are struggling to gain traction and truly grow their business on a national scale given the complexities of the industry, the vast differences in regulations across the country and the fact that medical marijuana is still illegal at the federal level.

Of course, in the “penny stock” universe – where all cannabis companies currently trade – a 50% drop in price might equate to just a few cents. And big price swings in either direction are common, sometimes on a daily basis, given the volatility of these types of stocks. So the situation could change quickly.

But the rise and fall of marijuana stocks as a whole on a quarterly basis provides a least some indication of investor sentiment about the industry in general.

On the bright side, the share prices of a handful of firms rose in the second quarter. At this point, however, it could be some time before a public cannabis firm truly breaks loose and posts significant, lasting gains. The business models of publicly traded cannabis companies are still being proven, and there’s a hefty amount of skepticism over whether any of them will be successful in the long term.

Here’s a look at how some marijuana-related stocks performed in the second quarter:

Cannabis Science (CBIS): Down 20%, falling from 5 cents at the beginning of April to 4 cents at the end of June. It is still trading at 4 cents a share. Current market cap: $30 million.

Fusion Pharm (FSPM): Down nearly 50%, from 59 cents at the start of April to 30 cents at the end of June. It has since fallen to 24 cents a share. Current market cap: less than $1 million.

GreenGro Technologies (GRNH): Down more than 30%, from 6 cents in April to 4 cents in June. It is still hovering around 4 cents a share. Current market cap: $4.6 million.

GrowLife Inc. (PHOT): Up 25%, from 4 cents in April to 5 cents at the end of June. It has since fallen a penny and is back at 4 cents. Current market cap: $23 million.

Medbox (MDBX): Flat, from $25.50 in April to $25.52 in June. Now trading at around $27. Current market cap: $400 million.

Medical Marijuana Inc. (MJNA): Down 44%, from 25 cents in April to 14 cents in June. It’s now trading at about 13 cents. Current market cap: $119 million.

Nuvilex (NVLX): Up 43%, from 7 cents in April to 10 cents in June. It’s now hovering around 11 cents. Current market cap: $50 million.

Terra Tech (TRTC): Down roughly 40%, from 19 cents in April to 11 cents at the end of June. It currently trades at 10 cents. Current market cap: $8.7 million.

The X-Change Corp. (XCHC): Down 55%, from 9 cents in April to 4 cents in June. It’s still hovering around 4 cents. Current market cap: $2.7 million.


4 Comments:

  1. Where do you sell these stocks once you own them?

  2. The reason MJNA and some other stocks lost value was because certain people were manipulatiping the stock price so they could sell short and still make a huge profit. this does violate federal law so I imagine several people will be hearing the knock knock of federal marshalls at their door soon!. This is the only reason a stock can report a multi-million dollar profit like MJNA andf still lose stock value.

  3. Actually some of these companies are not following proper accounting and are doing some slight of hand when it comes to financial reporting. The over the counter market or as they are known “penny stocks” are examples of Buyer Beware. Was there manipulating going on, maybe, but also some funny accounting by the companies.

  4. Actually the TRUE reason why MJNA stock dropped so much was because when the long awaited Q1 was released, we found that shares were diluted and income was only about $500K while they claimed $5 Million. They claimed unsold stock as income. I lost a lot of money on that lie.

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