Apr 17, 2020 (Baystreet.ca via COMTEX) -- With various cannabis producers seeking stock prices sink to their lowest level in years as many investors begin to assess the ability of a lot of these companies to stay solvent through this pandemic, many investors are certainly concerned.
Other cannabis bulls continue to shrug off such concerns, noting we may see revenue numbers shoot higher as more people smoke at home due to various self-isolation requirements.
The Exchange Traded Fund (ETF) which tracks the cannabis sector, the Horizons Marijuana Life Sciences ETF /zigman2/quotes/208856346/delayed CA:HMMJ +0.99% has lost the vast majority of its value in recent quarters due to the aforementioned solvency concerns I pointed out which have been driven by a supply glut and worsening economics for legalized cannabis due to a pervasive and “sticky” low-cost black market for pot that not only exists, but continues to thrive in most parts of Canada.
I’ve continued to caution investors throughout 2018 and 2019 when cannabis stocks were going parabolic that this entire sector was in for a day of reckoning, and it seems that day is upon us (or at least creeping closer each day).
I’d encourage any investor who values his or her money to continue to steer clear altogether of this sector which remains highly speculative and dangerous at this point in time.