Nasdaq-traded shares of Cronos Group (CRON) - Get Cronos Group Inc Report were dropping double digits after analysts at Canaccord downgraded the company's Canadian-traded stock to sell while maintaining its C$17 price target.
The firm is turning bearish on the Canadian adult-use marijuana market and in turn also is turning bearish on Cronos' valuation.
Cronos' shares have been on a strong run ever since cigarette-maker Altria (MO) - Get Altria Group Inc Report invested C$2.4 billion in the company, but analyst Matt Bottomley said this has stretched the company's valuation.
"With Altria's C$2.4B investment now in the books, Cronos indicated that it intends to use the proceeds to accelerate its global growth initiatives, including its human capital, distribution footprint, branding, R&D and product formulation capabilities," Bottomley wrote. "Although we believe Cronos' valuation has gotten ahead of its fundamentals, we also note that the company has compiled a number of strategic initiatives that could eventually unlock longer-term value."
Cronos' shares were already under pressure following its fourth-quarter earnings release on Tuesday, in which the company reported a significant increase revenue but a wider loss.
For the full year, the company reported a loss of 11 cents per share, after reporting a full-year profit of 1 cent a year earlier. That increase was driven by a jump in the amount of kilograms the company sold, though Cronos didn't specify how many kilos it sold.
Cronos reported full-year revenue of $15.7 million compared with $4.1 million a year earlier.
Shares of Cronos were down 11% on Wednesday to $18.
How Much Money Will I Need to Retire?
Want to learn about retirement planning from some of the nation's top experts? Join TheStreet's Robert "Mr. Retirement" Powell live in New York on April 6 for our Retirement Strategies Symposium. For a limited time, tickets are available for $99 for this full-day event. Check out the agenda, learn about the speakers and sign up here.