Cronos Stock Takes Dip As Canadian Cannabis Company Reports 4th Quarter Loss

Cronos Group stock has slipped in early morning trading today after the Canadian cannabis company released its fourth quarter financial results, reporting a $11.6-million net loss in the period ending Dec. 31, 2018, compared with a profit in the same quarter at the end of 2017.

Share price for Cronos Group Inc (TO:CRON), one of the leading Canadian cannabis companies, had spiked in pre-market trading this morning, jumping just more than 6 percent ahead of the opening bell. But that surge was reversed as the numbers were seen.

The cannabis company reported net revenues of $5.6 million for the fourth quarter of 2018, compared with $1.6 million for the fourth quarter of 2017, an increase of $4 million, or 248 percent.

Revenues for all of 2018 increased to $15.7 million, compared with $4.1 million in 2017, a 285-percent hike.

“The increase in revenue was driven by shipments to the Canadian adult-use market and growth in cannabis oil revenue,” the company said in a statement. No specifics were provided. The last quarter of 2018 is the first period following the legalization of recreational marijuana in Canada.

Market observers were keeping a keen eye on the company’s performance in the recreational segment of the market, as well as how it performed in expanding its production capacity.

The company reported total operating expenses of $12.4 million in the fourth quarter of 2018, compared with $2.9 million for the same period in 2017, a $9.5-million, or 328-percent, increase. For full year 2018, operating expenses were pegged at $29.4 million, compared with $9.3 million in 2017, a 215-percent increase.

The company did report an expansion to its production capacity, with new growing facilities going into production and additional joint ventures signed in Israel and Australia.

And in major moves in the last quarter, Cronos received an infusion of cash as U.S. cigarette-maker Altria Group Inc. bought a 45-percent stake for C$2.4 billion. This deal was finalized earlier this month. Under the terms of the buy-in, Altria (NYSE:MO) has the option to invest an additional C$1.4 billion within four years, increasing its stake in the company to 55 percent.