The weed company bought U.S.-based Redwood for $300 million
Canadian marijuana grower Cronos Group Inc (NYSE:CRON) announced early this morning that it will buy U.S. hemp-based products producer Redwood for $300 million. The company manufactures and sells CBD infused skincare and other products, mostly known for its Lord Jones brand. In response, CRON stock is up 4% to trade at $13.24, set to break its six day losing streak.
Prior to today, CRON stock fell to a seven-month low of $12.70 just yesterday, falling south of its $14 region -- an area the security has been testing its footing atop since May. And while the stock is still trading right back below this region today, it still boasts a one-year gain of over 120%. What's more, the equity is sitting firmly in "oversold" territory, with a 14-day relative strength index of 28. This suggests that a short-term bounce may be on the horizon.
A round of analyst upgrades might be in the cards for CRON, too, especially with its quarterly earnings report right around the corner. Right now, only two in coverage consider it a "strong buy," while eight call it a "hold" or worse.
CRON's brief dip has short sellers piling on, up 14.4% in the last two reporting periods. The 37.66 million shares sold short represent a solid 21.6% of the stock's available float, and would take eight days to cover at its average pace of trading. This could put some wind at the equity's back, should some of these bears begin to hit the exits.