The 3 Worst-Performing Marijuana Stocks of 2019

Stocks like Tilray Inc (NASDAQ:TLRY) show that investing in marijuana isn’t necessarily a ticket to riches.

| More on:
Man with no money. Businessman holding empty wallet

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

This year might go down in history as the year that marijuana stocks started to diverge. After 2018, which saw small- and large-cap stocks move together as a class, different producers began to rise or fall on their own merits rather than on sentiment toward marijuana stocks as a whole. Now, almost halfway through 2019, we’re beginning to see which weed stocks are delivering consistent gains and which are beginning to flounder.

On the whole, 2019 has been an “OK” year for marijuana. Horizons Marijuana Life Science ETF, which tracks the entire sector, is up 32% year to date, after particularly strong gains early in the year. However, we’re definitely seeing some weed stocks that are performing well below the class average. The following are three of the worst performers.

Tilray 

Tilray (NASDAQ:TLRY) is by far the worst-performing large-cap weed stock of 2019, and the only stock on this list to be down year to date. Starting off the year at US$70, it was down to US$43 as of this writing — a 39% drop.

A pronounced Q4 miss is the most likely culprit for Tilray’s rapid decline: although revenue was up 200% year over year, the net loss of $31 million was double the company’s revenue. Another possible reason for Tilray’s slide is the fact that the company had reached an insane valuation last year and was due for a correction.

Aphria

Overall, Apria (TSX:APHA)(NYSE:APHA) has done well this year, up 20% year to date as of this writing. However, its stock peaked at $14.21 in February, and if you’d held since then, you’d be down about 30%.

Reasons for Aphria’s slide include a disappointing quarterly report that saw an earnings miss and a 34% reduction in recreational sales compared to the prior quarter. The decline in recreational cannabis was particularly alarming since it supports the claim that recreational cannabis sales would taper off after the novelty factor faded, although other marijuana producers have released earnings statements since then that showed growth.

CannTrust Holdings

Last but not least, we have CannTrust Holdings (TSX:TRST)(NYSE:CTST). Historically, CannTrust had been notable as one of the most profitable marijuana companies, having posted not only positive net income but also operating income. However, in Q4, CannTrust ended its profitable streak, posting a $25 million net loss and a negative cash flow of $7 million. By Q1 of 2019, these numbers had improved, but adjusted EBITDA remained negative.

In brighter news, the company slashed its cost per gram sold by about 50%, showing that it’s becoming more profitable in its direct sales operations; however, this improved efficiency wasn’t enough to make up for the introduction of excise taxes and other expenses.

CannTrust is currently working on a major expansion to its Perpetual Harvest Production facility — an investment that will enable the company to produce and sell more cannabis. This will undoubtedly have a positive impact on revenue, but in the short term, these expenses are hurting the profit picture.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned.

More on Cannabis Stocks

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Canopy Growth Stock: The Only Cannabis Stock to Consider Long Term

The cannabis stock industry remains an incredibly high risk one, but Canopy Growth (TSX:WEED)(NYSE:CGC) stock provides the best opportunity for…

Read more »

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Should You Stay Away From HEXO Stock?

HEXO (TSX:HEXO)(NASDAQ:HEXO) stock is on a downward spiral, and there is little hope it is going to recover soon.

Read more »

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Why Did Aurora Cannabis (TSX:ACB) Stock Plunge 75% in 2022?

A prominent cannabis stock has plunged by 75% in 2022, as the company’s losses continue to mount in the face…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Fire & Flower: A Small Pot Stock Poised for Strong Growth

Fire & Flower is a cannabis retailer well-positioned for growth thanks to its digital and delivery initiatives.

Read more »

edit Jars of marijuana
Cannabis Stocks

Why Aurora Cannabis (TSX:ACB) Stock Is Sinking This Week

Starting another round of capital raising has hurt investor sentiments, and the Canadian cannabis giant’s performance on the stock market…

Read more »

edit Jars of marijuana
Cannabis Stocks

Why Canopy Growth (TSX:WEED) Stock Plunged 19% Last Week

Canopy Growth Corp. (TSX:WEED)(NASDAQ:CGC) stock has plunged after the release of its final fiscal 2022 results.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

Why Aurora Cannabis (TSX:ACB) Stock Tanked 45% Last Week

There's no respite for Aurora Cannabis investors!

Read more »

Money growing in soil , Business success concept.
Cannabis Stocks

TFSA Investors: This Undervalued Gem Could Turn $6,000 Into $25,000

Here's why TFSA investors can hold undervalued growth stocks such as Verano in their portfolios right now.

Read more »