So, what’s going wrong for ASX cannabis shares lately and how have they performed?
What’s going wrong for ASX cannabis shares lately?
Interestingly, it’s not as though shares in these Aussie companies are performing poorly over the longer term. Little Green Pharma shares are up 157% in the past 12 months while the Creso Pharma share price has climbed 200% higher in the same period.
However, the past week or so has seen a correction of sorts. Mixed financial results in the August reporting season may be one factor weighing on ASX cannabis shares right now.
For instance, Little Green Pharma reported a 218% surge in revenue to $7 million in FY21 alongside some key strategic moves. The Aussie cannabis group successfully imported its first shipment of THC 16 cannabis flower medicine from Denmark to Australia, sparking a share price surge at the time.
With no major regulatory news in recent weeks, it appears that the recent earnings season has sparked a pullback from investors. The Incannex Healthcare Ltd (ASX: IHL) share price has rocketed 166.7% higher in 2021 but still edged 1.2% lower in the last 5 days.
That could indicate investors in ASX cannabis shares are cashing in some of their recent gains rather than any fundamental correction in value.
Some shares, like MGC Pharmaceuticals Ltd (ASX: MXC), have been boosted by recent announcements. MGC Pharma received approval for the UK import and prescription of its CannEpil+ product last week which sparked a share price surge.
One factor could be the risk of increased competition in the sector. Cronos Australia (ASX: CAU) and Queensland-based CDA Health entered into an $85 million merger announcement last week as it looks to increase the size and scale of its operations.
It’s been a busy little period for ASX cannabis shares. Given the fledgling nature of the industry and the size of these Aussie companies, investors will be keeping a close eye on them in the final quarter of the year.