Weed Stock Roasted by Short Seller Citron

Citron set a $1 price target for Village Farms

by Patrick Martin

Published on Apr 16, 2019 at 2:30 PM

Many weed stocks are higher today, after sector leader Canopy Growth's (CGC) CEO reportedly projected revenue of $744 million this year. However, one cannabis name sitting out today's uptrend is Village Farms International Inc (NASDAQ:VFF), down 14.4% to trade at $10.84, after a scathing report from notorious short seller Citron Research, which called on the Securities and Exchange Commission (SEC) to investigate the company. Against this backdrop, VFF put options are trading at an annual-high clip.

Citron also set a price target of $1 for VFF shares, and said Village Farms "has used investors’ enthusiasm for cannabis to create shady joint ventures with unrealistic projections." In response to the note, VFF's usually quiet options pits have come to life with a bearish tilt.

More specifically, nearly 18,000 VFF put options have changed hands today -- 24 times the expected intraday amount and more than four times its former annual high of 4,646 puts traded in a single session. Leading the charge is the April 12.50 put, but not far behind are the April 11 and 10 puts, with new positions being opened at all three. Buyers of these puts expect Village Farms shares to sink below the strikes through the close on Thursday, April 18, when the options expire.. 

This runs in accord with the options trend seen in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), VFF sports a 10-day put/call volume ratio of 1.98, which indicates long puts have outnumbered long calls by a nearly 2-to-1 ratio. 

On the charts, Village Farms stock tapped a record high of $18.10 on March 22. But in April so far, VFF has finished in the black only four times, and is well on its way to a second-straight weekly loss of 10% or more. Today, the security is pacing for its worst session since January 2018.

Daily Stock Chart VFF


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