Cronos Group (NASDAQ:CRON)
- Ticker 2:TSE:CRON
- CEO:Mike Gorenstein
Cronos Group (NASDAQ:CRON) Stock Price
Disclaimer: Past performance is not an indicator of future performance.
Cronos Group (NASDAQ:CRON) Company Overview
Cronos Group is a global cannabinoid company with international production and distribution across five continents.
Cronos was put on the map in November 2018 when the company received the second-largest cannabis industry investment in history after Altria invested USD$1.8 billion to acquire a 45% stake in Cronos. This partnership opened the gates to Cronos for global distribution, knowledge, experience, and one of the best distribution platforms in the regulated products' industry.
This partnership was put to use when Cronos released its 'Peace+' range of CBD tinctures. These products are being tested in over 1000 retail stores across the US through Altria's distribution network, with the aim of gaining an insight into what products are most demanded. Initially, Peace+ will produce and sell hemp-derived CBD products such as low-calorie, alcohol-infused CBD drinks. After analyzing which products perform best, Peace+ will then expand and upscale the product range.
Alongside production and distribution, Cronos Group is also putting energy into researching synthetic cannabinoids, with the company entering into a deal with Ginkgo Bioworks to study and synthesize novel cannabinoids. This process of synthesizing unique cannabinoids would enable Cronos to create and combine these cannabinoids in proprietary formulations – which may not have occurred in nature – and hence create specific finished products that could treat specific medical ailments, or create unique recreational experiences. All at a fraction of the cost per gram compared to traditional brick-and-mortar cultivators. This would create a significant unique proposition that should underpin further growth in the Cronos Group stock price.
Then, in August 2019, Cronos paid just over $300 million to purchase Lord Jones, an upscale producer of CBD-based beauty care products that are sold in retail outlets such as Sephora and the Standard Hotel.
This deal serves as Cronos' primary entry point for the U.S., laying the foundation for national brand exposure and awareness. This one deal could be the driving force behind the Cronos Group stock price in the coming 12 to 24 months.
In addition to creating a U.S. entry point, Cronos has since established an entrance to Asia through Cronos Australia (ASX:CAU), which recently listed on the Australian Stock Exchange. Prior to the Initial Public Offering, the Cronos Group held a 50% stake in Cronos Australia. However, post the listing this share has dropped to around 31%.
The IPO, which raised over $20 million for the company, is being used to establish CRON's distribution hub for Asia. Cronos Australia has both an import and export license and hence will act as the APAC distribution platform the Peace Naturals (and eventual Peace+) range of products.
Cronos' 2019 Q3 results showed revenue growth of 24% quarter-on-quarter driven by a higher volume of cannabis kilograms sold, with Cronos producing 3,142kg of cannabis. However, the company recently explained that they have made the decision to use the wholesale market for their supply of cannabis moving forward. This includes both dry flower and raw oils. Instead, they are going to focus their attention on production and brand creation.
On top of revenue growth, following on from the Altria deal, this quarter Cronos had almost $1.4 billion on the balance sheet. This makes Cronos the second most capitalised company on the planet (behind Canopy Growth thanks to their Constellation deal).
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