Whilst it was a day to forget for almost all shares on the local market, few areas of the market tumbled as hard as the medicinal cannabis industry.
Here's how things ended in the industry on Monday:
- The Auscann Group Holdings Ltd (ASX: AC8) share price ended the day 8% lower at $1.45.
- The Botanix Pharmaceuticals Ltd (ASX: BOT) share price emerged from its trading halt with an 11% decline to 12.5 cents.
- The Cann Group Ltd (ASX: CAN) share price dropped 10% to $2.63.
- The Cannpal Animal Therapeutics Ltd (ASX: CP1) share price tumbled 10% to 18 cents.
- The Creso Pharma Ltd (ASX: CPH) share price fell 7% to 85 cents.
- The MMJ Phytotech Ltd (ASX: MMJ) share price dropped 6% to 45 cents.
- The Hydroponics Company Ltd (ASX: THC) share price fell 5% to 80 cents.
- The Zelda Therapeutics Ltd (ASX: ZLD) share price ended the day 12% lower at 11 cents.
What happened?
While the Botanix share price decline is related to its shares emerging from a trading halt following the successful completion of a significantly oversubscribed $15 million placement of shares at 11 cents per share, the rest of the industry appears to have been impacted by investors going into risk off mode.
Considering medicinal cannabis shares have been flying high this year and have a significant amount of growth built into them, this latest decline isn't overly surprising and mirrors declines being seen overseas.
Canadian cannabis giant Canopy Growth Corp, for example, shed 12% of its value on Friday. This decline wiped off a massive C$500 million from its market capitalisation in one trading session. Fellow cannabis giant Aurora Cannabis also sank notably lower, losing almost 17% of its value.
Should you buy the dip?
While I do not doubt for a second that in the future we will look back and realise that one or two of these medicinal cannabis shares were trading at absolute bargain prices today, knowing which one will be the market leaders is difficult to predict. In light of this, investors may want to hold out until it becomes clear which companies are the winners and which are the losers.
