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.
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.
If there's one thing for sure, 2020 has been the year we embraced sanitisation. Scott Phillips has discovered a little-known Australian healthcare company could be set to reap the rewards of the post-covid world.
Better yet, this fast-growing company is currently trading at a 30% discount from its highs. Scott believes in this stock so much, he's staked $209k of our own company money on it. Forget 'buy now pay later', this stock could be the next hot stock on the ASX.
Scott and his team have published a detailed report on this tiny ASX stock. Find out how you can access our TOP healthcare stock today!
As of 2.11.2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Why the Rhythm Biosciences (ASX:RHY) share price rocketed 28% to a record high – December 4, 2020 4:51pm
- Here’s why the Home Consortium (ASX:HMC) share price is in a trading halt – December 4, 2020 3:35pm
- Brokers name 3 ASX shares to buy right now – December 4, 2020 2:48pm