Several Canadian marijuana stocks plunged on Friday because of worries about the notorious coronavirus, COVID-19. It caused the major market indexes to fall too. Canopy Growth (NYSE:CGC), the biggest Canadian cannabis producer, shares were down by 10.5% as of 3:02 p.m. EST. Shares of Aurora Cannabis (NYSE:ACB) were sinking little bit more by 11.5%. Very similar situation with Village Farms (NASDAQ:VFF) and Emerald Health Therapeutics (OTC:EMHTF), where stocks fell by 11.2% and 11.6%, respectively.
What does the corona virus outbreak (the spread of COVID-19) have to do with marijuana stocks?
There could be several reasons. Most of the vape products and marijuana growing equipment are manufactured in China, where many factories are closed because of the corona virus outbreak. Also, because of many consumers choose to stay home due to fears about being infected by the corona virus, retail cannabis sales are negatively effected too.
If the situation will not get better, we may see more of the downturn in the whole stock market. Mainly what you see in the stock market now is investors’ fear. They are concerned that current situation might grow into economic recession, so they are cashing out or looking at the other assests for safer investition than stocks.
Canopy Growth, Aurora, Emerald Health, Village Farms, and other Canadian pot stocks are being affected very hard because they’re not steadily profitable.
What are the predictions?
There’s no easy way to know how long the overall stock market downturn will continue to drag down marijuana stocks. As always, for people who are confident about the cannabis industry long-term profitability, current market sell-off could be a good time opportunity to buy many stocks with discounts. But even if coronavirus not going to be stopped soon, some marijuana stocks of companies with stronger financial positions are better picks than others, because those weaker ones could ran out of cash.
