Cronos Group CRON stock was profitable this quarter despite the inability to actually be profitable. The core business is a losing proposition at this point despite the marijuana stock being in business since 2012 and having expanded into adult-use cannabis in Canada in 2018.
Time is money. Cronos CRON stock has every reason to continue lower from the current price. But, eventually, CRON stock may turn around. Should you wait this out, buy now? Or, should you realize that time is money and getting involved in CRON stock may be a loss of both time and money. Cronos Group flipped in Canada in 2018 to try and take on the adult-use segment of cannabis. Cronos Group was not necessarily profitable before that move. Now that Cronos Group is involved in the legal cannabis industry, and after three years of pursuing this, Cronos Group is no where near profitable.
Cronos Group CRON stock is a popular stock and may have gotten caught up in the hype of cannabis initially. It is a very popular stock. And, I think that because CRON trades on NASDAQ it has drawn in a lot of attention to the bigger players. Maybe that is not always a good idea.
Cronos Comparisons
For those just showing up to my website and YouTube Channel, I have a breakdown of the Complete list of Top 100 Cannabis Companies where I show how each respective cannabis company stacks up. This is a powerful tool that can be used to size up cannabis companies.
As for Cronos, here is how these marijuana stocks metrics stack up via data collected from Cronos Group‘s website:
- Revenue Growth Rate: 6.1% – #51
- Revenue Per Share: $0.042 – #41
- Gross Margins: -300% – #96
- Operating Efficiencies: 284.6% – #96
- EBITDA/Revenue: -326.9% – #94
- Cash/Debt Ratio: 395.3% – #5
These numbers are outstanding in the sense that there are some that are dead smack in the middle of the pile and then others that are simply at the very bottom.
But, I will continue to encourage everyone to look at these and realize that there are changes that are occurring. Cronos is in a position to start growing the company as some foundational aspects are really starting to roll out.
Cronos Financial data
Above, you can certainly see that Cronos Group is far from being one of the best marijuana stocks to buy. Here are the respective financial data charts breaking down how Cronos Group CRON Stock performs.
Revenue
Cronos Group Revenue is inching higher and higher:
Future expectations are for revenue to hit about $100M for the 2022 fiscal year. That would put revenue growth at about $25M on average per quarter. That is about a 60% increase in revenue quarterly (On average).
When you have significantly higher revenue the bills get paid better. But, we do not know how this could potentially play out simply because margins and cost metrics are so far out of line with normality that it makes this a difficult process.
Gross Margins
Gross margins on a positive basis have been elusive. But, at the same time, there will be changes ahead:
Keep in mind what it takes to build up a business: Scale. If the rent on the processing facility consumes 50% of revenue then this is expensive. But, what if revenues increase by 100%? All of a sudden, that 50% number is down to 25% and the picture changes. Likewise, labor costs are set for any one person doing any one task. What if that one person were to do 25% more tasks in any one period of time? Productivity has gained but, costs are exactly the same.
This is where Cronos Group is right at this moment. They are laying out the framework for larger revenue gains. But, they are also at a level where these increases do not materialize in a manner that screams excellence.
Total Operating Costs
If you consider the above-mentioned scenarios where increases in revenue affect costs and margins, you can see where the potential for improved metrics in operating efficiencies exists. Here are Cronos Group Operating Efficiencies:
Cronos Group’s operating expenses have not wavered too much. This will start to push this above metric lower as revenues continue higher and higher(You want the lowest possible number here). This is basic math as the equation for this percentage number is Total Operating Costs/Revenue. If revenue goes higher while operating costs remain at the same basic level, then on a percentage basis Cronos Group will see continually improving operating efficiencies.
EBITDA & Net Earnings
Cronos earnings? After 2 years they are non-existent and getting worse.
Consistency is the name of the game. As it turns out, consistently, Cronos Group is seeing a dropping number in its EBITDA. If you are gauging the future of Cronos CRON stock based on the above chart.
As you can see from below, however,
Despite the core company metrics, Cronos Group was profitable for the quarter.
Cronos has a ton of cash. That is good, of course. And, adding net profits will add to that cash pile. But, the latest positive net earnings were outside of normal operations. Therefore, you cannot count on this occurring. Yet, these events occur for Cronos Group from time to time… making them rely on some level.
Cronos Group CRON Stock Chart
Like many stocks in the industry, CRON Stock has been trending lower and lower.
Cronos stock continues to slide lower, as you can see above. I see this as warranted on some level but, overall, the industry is getting no love, as you can see from below:
The MSOS AdvisorShares ETF continues to slide lower over the past few days. There is absolutely no love with these stocks right now. For those holding on to any of the MSOS stocks, this can be an anxious moment; I do not doubt that. But, trust the process. Along with that process, you will see gains. But, these may take time.
Cronos CRON Stock Future
Time is money. This is a consistent theme that I preach on this site and on my YouTube channel. Given that, Cronos Group was started in 2012. They are not profitable 9 years later. And, I do not see any clear pathway to profitability.
Time is money. I will say this again and again. And, while Cronos Group may at some point become profitable this appears to be a long way off. And, in the meantime, you are passing up on other opportunities.
I would pass on Cronos Group. They have some work to do and it may take some time to get there.
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Almost all Cannabis stocks have been tanking the past few months even though their financials are getting stronger with more and more expansion. When do you think we will see a turn around ?
I agree, I just subscribed primarily to here some current analysis on the cannabis sell off taking place. Most companies seem to be getting more profitable while legislation continues to (slowly) gain momentum, yet stock prices are going down. Is this the big players taking profits during worldwide uncertainty, or something else?
In my opinion by year end at the latest: Legal action pressure is mounting against cannabis being a schedule 1 drug: Right now the democrates and the new heads of the FDA, DEA, DOJ, DOV are supportive of some form of legalization, as are all states except 4 republican states. Senator’s know voting against their state wishes will loose them re-election in 2022. Senate Discussions start in September.
There are two under the radar federal legal cases challenging the constitutionality of the only obstacles to legalization… the DEA legal ban on cannabis which coming up for trial September 30, 2021, the Judges asked for constitutional comments about DEA violating States Rights. It appears evident that if courts will find against DEA then will order DEA to immediately remove Cannabis from being a schedule 1 drug, thus making it legal and forcing congress to enact legislation by year end.