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Cannabis Producer Cronos Plunges On $107M Loss, Says Pricing Pressures Drove Write-Downs

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Cannabis Producer Cronos Plunges On $107M Loss, Says Pricing Pressures Drove Write-Downs

Cronos Group (NASDAQ: CRON) opened Thursday morning at $6.62 a share, but quickly lost ground on the heels of an earnings report showing a second-quarter net loss of $107 million.

Cronos also reported a $40-million impairment charge related to a cannabidiol deal with CBD brand Lord Jones and a $35.9-million noncash loss related to an investment from cigarette conglomerate Altria Group (NYSE: MO). 

"In the second quarter of 2020, we continued our progress despite unprecedented shifts in our industry and the global economy," Cronos CEO Mike Gorenstein said in a prepared statement.

Cronos Q2 Earnings Breakdown

  • Net revenue of $9.9 million for the three-month period increased by $2.2 million year-over-year. 
  • The increase was credited to sales resulting from the rollout of cannabis vaporizers in the Canadian market and the Redwood acquisition. 
  • Cronos cited an inventory write-down of $3.1 million on dried cannabis and cannabis extracts. 
  • The company anticipates "further inventory write-downs" due to pricing pressures in the marketplace. 
  • An operating loss of $34.8 million in the second quarter of 2020 represents an $18-million year-over-year increase.

Cronos has more than $1.1 billion in cash and cash equivalents, including $213 million in short-term investments, according to Barron's.

CRON Price Action

Cronos shares were down 15.01% at $5.93 at last check Thursday. 

Courtesy photo. 

 

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