CEO Ouster Sends Pot Stock Soaring

The company's CEO and president have both left after an illegal growing scandal

Deputy Editor
Jul 26, 2019 at 3:28 PM
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Canada-based pot stock CannTrust Holdings Inc (NYSE:CTST) announced last night that it fired CEO Peter Aceto and forced the resignation of President Eric Paul. The terminations closely follow several reports that Paul and Aceto were aware of illicit grow rooms in Southern Ontario, discovered by authorities last month. 

It has been a rough couple of months for the equity, with CannTrust shares down 70% from their initial close of $9.06 when the stock premiered on Wall Street back in February. The equity's near continuous slide has been exacerbated by the Health Canada crackdown in response to the scandal. In fact, CTST just landed at an all-time intraday low of $1.87 yesterday after stringing together five consecutive losses.Today's news, however, has the stock up 17.9% at $2.30, set to snap that five-day losing streak. 

Short sellers have started to take profits as CTST has grown closer to theoretical "support at zero." After peaking at 10.8 million shares in early July, short interest dropped by 28.6% in the most recent reporting period. 

Analysts, on the other hand, are split over the pot stock, with three calling it a "strong buy" and three slapping it with a tepid "hold" or "sell" rating. The consensus 12-month target price of $7, though, more than doubles CTST's current perch. 

Traders might want to note the stock's 14-day Relative Strength Index (RSI), too. Despite today's bounce, this indicator is still planted at 28 -- indicating CTST remains in oversold territory. 

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