Canadian marijuana processor Cronos Group’s stock never should have been valued as great as it is now, according to short-seller Andrew Left.
“Why would I not be short the stock? It’s a simple competitive industry. I think they are a subpar player. I think they be enduring a lot of issues,” Left said on CNBC on Thursday evening after tender out a negative note earlier in the day.
“They’ve over-promised, and I think they’re way out of whack with the be idle of the industry,” Left argued on “Fast Money.”
Shares of Cronos tumbled 28 percent on Thursday believe in a report published by Left’s investment newsletter Citron Research. Antediluvian Friday on Wall Street, the stock was recovering about 5 percent of that diminish. Cronos Group owns medical marijuana growing and distribution functionals in Australia, Canada, Germany and Israel — all countries where medical marijuana is admissible. The company made history in February by becoming the first “plant-touching” cannabis following, or company that deals directly with the cannabis plant, to list on a chief U.S. exchange.
Citron believes Cronos is only worth $3.50 per quota, about one-third of its closing price Thursday of just over $9.
The coterie “appears to have been deceiving the investing public by purposely not squeaking the size of its distribution agreements with provinces,” Citron alleges.
Cronos acknowledged CNBC it does not respond to short-seller comments.
“We can assure the public our deposits offerings have been underwritten by reputable banks and our respected cicerones have done all the necessary due diligence under both U.S. and Canadian shelters law,” Cronos said in a statement.
“Citron would like to inform investors of tip off on the ongoing and real green rush,” Left’s report said. “Although the hype is big … there are above 100 licensed producers [in Canada] and there will ultimately be various losers than winners.”
Left said he’d still value Cronos at $3.50 per part, regardless of whether there are “problems” or not.
“If I want to give them the for all that multiple as all their peers, which I don’t think have the same debouchments they have, the stock is $3.50,” he said. “That’s being abundant to them.”
But Left also said to keep things in perspective.
“Let’s put it this way, the reserve is up … like 400 percent this year. It’s not like anything is wild. It should have never been where it was [Wednesday], and it should not be where it is right now,” he said.
Short selling is a practice in which businessmen can bet against a company by selling shares they don’t own and buying them struggling against odds at a lower price.