Canadian cannabis companies are taking it on the chin from well-known short-seller Andrew Left of Citron Research.
In an interview with CNBC on Wednesday, Left admitted that he has taken short positions on some of the major pot producers including Tilray (Tilray Stock Quote, Chart NASDAQ:TLRY), Canopy Growth (Canopy Growth Corp Stock Quote, Chart TSX:WEED, NYSE:CGC) and Cronos Group (Cronos Group Stock Quote, Chart: NASDAQ:CRON), all of which have had their share prices inflated, according to Left, by retail investors who have been duped about the global reach of Canadian cannabis.
Already infamous in Canada for taking on names like the former Valeant Pharmaceuticals and e-commerce company Shopify, Andrew Left has of late turned his sights to the cannabis space, asserting that while there will be winners and losers in the pot sector, many of the currently bigger names including Tilray, Canopy and Cronos are over-hyped and over-priced.
Speaking on Nanaimo, BC-based Tilray, which rose more than 400 per cent since its debut in July and boasts a market cap of $9.5 billion even as its revenue for the most recent quarter was a mere $10 million, Left claimed that the company’s limited number of available shares has inaccurately priced up the stock. (All figures in US dollars.)
“Where is [Tilray] now? $103 a share —that’s a joke,” says Left. “I mean, this is not a stock, it’s an instrument. It’s not a company. What’s unfortunate is that it’s getting this much airtime. Because when you take companies like Tesla, like Apple, these are companies. Tilray, it’s a stock operation.”
“It’s a tight-flowed stock —when the float opens up, it’ll go lower,” he says. “It’s held by retail investors because any professional would look at it and [laugh].”
Tilray reported its third quarter this week, producing a net loss of $18.7 million or $0.20 cents per share, which is up from last year’s Q3 loss of $1.8 million or $0.02 cents per share. The stock dropped over seven per cent on the release but is up over seven per cent in trading on Thursday.
Canopy Growth’s stock also took a tumble on the recent release of its quarterly report, falling eight per cent on a posted loss of C$330.6 million and a top line of C$23.3 million which was well short of analysts’ expectations of C$59.1 million. (Both companies’ financials were for periods before the opening up of Canada’s legal recreational cannabis market on October 17.)
Left also claimed that Canadian pot companies will not lead the market internationally, on the one hand simply because there are better climates in which to grow marijuana and on the other hand because by population alone US-based companies will have a much greater reach as more and more US states legalize pot.
“Once the US [licensed producers] come on and people will see: the faster that it becomes legal in the US, the quicker that Canada’s names go lower,” Left says. “Tilray, Canopy, Cronos — these are publicly traded names in the US that are Canadian names. They won’t get the exposure they will in the US. They’re not players internationally, I don’t care how many press releases they put out, they’re not going to be shipping cannabis from Canada to Australia.”
Earlier this year, Left announced that he would be starting his own fund centered around the cannabis sector and taking both long and short positions on various cannabis stocks.