(Bloomberg) -- For an industry that was already struggling to survive slumping stock prices and a virtual shutdown of capital markets, it's hard to overstate the impact of the coronavirus-related market meltdown.
Between the close of trading on Feb. 20 and Thursday, when many global stock markets were hit by once-in-a-generation declines, the BI Global Cannabis Competitive Peers index slumped 43%, bringing its 12-month decline to about 81%.
It's debatable what impact the rapidly spreading pandemic will have on revenue -- all those housebound, anxious people could be very good for pot sales -- but it may be too little, too late for some companies that were already running low on cash.
“We believe focus among cannabis investors has shifted to minimizing downside; in other words, evaluating cannabis stocks from a liquidation perspective, simply comparing market capitalization to net cash balances,” CIBC analyst John Zamparo said in a note published March 11.
The fact that some companies are tapping the markets at this tense and volatile moment signals a level of desperation. Tilray Inc. shares plunged 32% Friday, the most ever, after it announced plans to raise $90.4 million via a registered offering of shares and warrants. The offering was priced at $4.76, well below Thursday's closing price of $5.95.
The sale “reinforces the serious challenges it faces managing conditions in Canada's weak legal-cannabis market with stretched finances,” said Bloomberg Intelligence analyst Kenneth Shea. “Asset sales could also be on the table soon to increase its strategic focus and liquidity.”
Events This Week
NOTE: Most scheduled conferences have been canceled or postponed due to the coronavirus
MONDAY 3/16
- New Age Beverages Corp. reports earnings pre-market
- CV Sciences Inc. reports post-market
WEDNESDAY 3/18
- Aleafia Health Inc. reports pre-market
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To contact the reporter on this story: Kristine Owram in New York at kowram@bloomberg.net
To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Will Daley
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