Shares of Cronos Group have been punished by buyers this week after the Ontario-based licensed producer of hashish was focused by short-seller Andrew Left of Citron Research – however at the least one analyst referred to as the wild swing “overdone.”
Citron’s report, issued Aug. 30, accused the Cronos administration workforce of “deceiving the investing public” by not disclosing the dimensions of its distribution agreements with provinces.
The report, which didn’t cite its sources, claimed “the agreements are so small they could never justify the premium investors are paying for the stock.”
The report additionally accused Cronos of securities fraud for failing to reveal the recall of a 1-kilogram batch of medical marijuana from the German market final spring.
Shares of Cronos fell 30% on Aug. 30 earlier than rebounding 10% as of 10:30 a.m. ET the next day.
Its shares had skyrocketed about 90% between Aug. 17 and Aug. 29.
GMP Securities analyst Martin Landry identified a number of flaws in Citron’s report.
In a word to buyers, Landry referred to as 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 notice continued.
In reality, Cronos introduced one of many largest assured provide offers up to now in Canada – a five-year “take or pay” provide settlement with Cura Select Canada to buy a minimal of 100,000 kilograms (220,462 kilos) of hashish over a five-year interval.
Landry stated the underside line is that the inventory response “appears significantly overdone.”
It’s not the primary time Citron has focused a Canadian hashish firm.
In January, the agency warned buyers of Aurora Cannabis’ “Enron-type accounting,” calling the Alberta-based licensed producer “the weakest player in the space.”
Aurora’s shares have misplaced about 25% to date this yr.
Cronos is traded on the Toronto Stock Exchange and the Nasdaq underneath the ticker image CRON. Aurora’s shares are traded on the TSX as ACB.