Why is Aurora Cannabis' (ACB) Stock Sinking Today?

: ACB | Aurora Cannabis Inc. Common Shares News, Ratings, and Charts

ACB – Canadian pot stocks have been exploding higher over this year but Canadian legalization may have inflated an industrywide bubble.

What happened


Canadian pot stocks appear to be in for a particularly rough day today. As proof, shares of Aurora Cannabis (NYSE:ACB)Canopy Growth Corporation (NYSE:CGC), and Cronos Group(NASDAQ:CRON) all fell by at least 10% in pre-market trading this morning. What’s the driving force behind this latest widespread sell-off in the cannabis space?

Fortunately, Aurora, Canopy, and Cronos’ shares aren’t dropping in response to a company- or industry-specific event. No, these high-flying pots stocks appear to be falling victim to a host of macroeconomic and geopolitical concerns that are weighing on stocks in general today.

So what

Chief among these various headwinds is that some top economists are sounding the alarm that the U.S. economy could start to cool off in a big way in 2019 — and perhaps even go into a full blown recession by 2020. This dire claim is based largely on the yield of the five-year Treasury note falling below that of the three-year note last Monday. This so-called “yield curve inversion” has been a fairly reliable indicator of incoming recessions and economic slowdowns ever since the end of the second world war.

What does this economic warning signal have to do with pot stocks? Canadian pot stocks have been exploding higher over this year thanks to Canadian’s decision to end prohibition on the drug for recreational purposes among adults earlier this year. Unfortunately, this landmark event may have inflated an industrywide bubble.

Aurora, Canopy, and Cronos, after all, have all seen their shares trade at enormous premiums this year — premiums that simply aren’t supported by their near-term fundamentals. As such, it’s not surprising that investors are backing away from companies with bloated valuations ahead of a possible downturn in the economy.


Aurora Cannabis Inc. shares were trading at $5.12 per share on Thursday afternoon, down $0.28 (-5.19%). Year-to-date, ACB has declined -32.90%, versus a 0.95% rise in the benchmark S&P 500 index during the same period.

ACB currently has a StockNews.com POWR Rating of F (Strong Sell), and is ranked #18 of 23 stocks in the Agriculture category.


This article is brought to you courtesy of The Motley Fool.

9 "Must Own" Growth Stocks For 2019

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Top Stories on StockNews.com

NYSE: DIS | Walt Disney Company (The) Common Stock News, Ratings, and Charts

Disney's (DIS) new live-action film, Aladdin, expected to make $80 million this weekend

The live-action “Aladdin” film starring Will Smith is expected to lead the box office over the Memorial Day holiday weekend.
NYSE: SQ | Square, Inc. Class A Common Stock News, Ratings, and Charts

Is Square (SQ) stock a good buy at this price level?

SQ stock now trades for just $65.
NYSE: F | Ford Motor Company Common Stock News, Ratings, and Charts

Is it possible Ford (F) would buy Tesla (TSLA)

Making a deal work would be a challenge.
NASDAQ: CVCO | Cavco Industries, Inc. News, Ratings, and Charts

Best & Worst Performing Stock Industries for May 24, 2019

Led by ticker CVCO, "Homebuilders" was our best performing stock industry of the day, with a 2.60% gain.
NYSE: EMES | Emerge Energy Services LP Common Units representing Limited Partner Interests News, Ratings, and Charts

Best & Worst Performing Small Cap Stocks for May 24, 2019

EMES leads the way today as the best performing small cap stock, closing up 76.47%.

Read More Stories


More Aurora Cannabis Inc. Common Shares (ACB) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ACB News
Page generated in 1.1356 seconds.