What's going wrong for ASX cannabis shares lately?

Why Aussie cannabis companies are worth watching right now…

| More on:
Falling cannabis asx share price represented by cannabis leaves on a declining line graph

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX cannabis shares have been smashed in the past week or so. Leading names like Little Green Pharma Ltd (ASX: LGP) and Creso Pharma Ltd (ASX: CPH) finished last week firmly in the red.

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.

Foolish takeaway

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.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Young woman using computer laptop with hand on chin thinking about question, pensive expression.

Should you buy Telstra stock on a pullback?

Is this telco a buy for value hunters?

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Share Fallers

Why did the Core Lithium share price just crash 6%?

Investors are bidding down the Core Lithium share price today.

Read more »

Sports fans looking at smart phone representing surging pointsbet share price
Share Gainers

Guess which ASX All Ords share just rocketed 25% on an earnings upgrade

Investors are bidding up the ASX All Ords share following an improved FY 2024 earnings outlook.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
Mergers & Acquisitions

Are Star shares now rolling the dice on a rescue bid?

Rumour is that a US-based casino operator is ready to revamp this fallen star.

Read more »

A man closesly watch a clock, indicating a delay or timing issue on an ASX share price movement
Mergers & Acquisitions

BHP shares charging higher as the clock ticks down on the Anglo American takeover

BHP has less than three days before the clock runs down on its $64 billion Anglo American takeover bid.

Read more »

A bored woman looking at her computer, it's bad news.
Share Market News

These are the 10 most shorted ASX shares

Let's see which shares short sellers are targeting this week.

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Broker Notes

Morgans says these ASX stocks can rise 20% (and pay big dividends!)

The broker believes some very big returns could be on the cards over the next 12 months.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Monday

A positive start to the week is expected for Aussie investors.

Read more »