E Cannabis Central: Canadian LP Pot Stock Sub-Index Continues To Decline

The decline in the Canadian Licensed Producers (LP) component of the munKNEE Pure-Play Pot Stock Index accelerated this past week (-9.6%) after having declined the previous week (-8.2%) and is now down 17.0% so far in April. 

When so many stocks in the same industry sink, there usually is a common denominator and, in this case, the culprit was Aphria's dismal Q3 financial results (see here). Aphria's shrinking gross profits on growing sales (they declined by nearly half in the quarter) speaks to declining pricing power in the industry as oversupply continues to weigh on profitability for medical marijuana and recreational marijuana alike.

LP Pure-Play Pot Stock Index Performance

The constituent price changes for the week ending April 16th were as follows, in descending order, with their April performances to date in brackets:

  1. Organigram (OGI): -11.3% (-26.7%) to $2.52/share
  2. Hexo (HEXO): -14.6% (-14.9%) to $5.52/share
  3. Aphria (APHA): -13.1% (-22.0%) to $14.14/share
  4. Tilray (TLRY): -13.0% (-22.2%) to $17.20/share
  5. Aurora (ACB): -11.6% (-13.8%) to $7.88/share
  6. Rubicon (ROMJF) -8.3% to (-1.6%) $2.53/share
  7. Cronos (CRON): -5.9% (-11.1%) to $8.36/share
  8. Canopy (CGC): -4.1% (-13.3%) to $27.80/share

Measuring Volatility

Beta measures the volatility (the up and down movement) of a stock relative to the overall stock market and serves as a measure of the volatility of a stock compared to others in the same sector. What you see below is the extent of volatility of each stock in our Pure-Play LP Pot Stock Sub-Index from most stable to most volatile:

  1. Organigram: 0.99 (i.e. historically its stock moves more or less in tandem with the overall stock market)
  2. Cronos: 1.73x greater volatility than the average market
  3. Hexo: 1.74x
  4. Rubicon: 1.75x
  5. Canopy Growth: 2.15x
  6. Aphria: 2.58x
  7. Tilray: 2.79x
  8. Aurora: 3.15x 
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