Last quarter, Cronos had US$1.3 billion in cash and $0 in long-term debt. He is inspired by art and human culture and occasionally gives us a sneak peek into what is happening behind the scenes at Veriheal. Even after a more than 67% decline, Cronos (NASDAQ:CRON) stock remains overvalued. Shifts in behaviour were the impetus behind Altria’s multi-billion dollar investments in vape manufacturer Juul and cannabis producer Cronos. Please read the Privacy Statement and Terms of Service for more information. After paying $1.8 billion for roughly half the business, why wouldn’t Altria acquire the rest at one-third the price? Altria is not just any tobacco company either. This recent deal gives us an idea of Altria’s endgame for Cronos. Beginning in 2018, merger and acquisition (M&A) activity, and outside investment into the North American marijuana industry, really began to pick up. Like Constellation Brands’ (NYSE:STZ) de-facto takeover of Canopy Growth, Altria has a plan. In addition, Cronos outgoing CFO and new Chief Commercial Officer Billy Hilson went through some of the things the marijuana company expects to do with the money Altria invested… Probably not. A cannabis database has shown that the American funding which is allocated to cannabis is focused on identifying the negative impacts and adverse effects associated with the plant. Altria controls 46% of the U.S. market for traditional cigarettes, but its stock has declined more than 20% over the last year as the company weathers declines in traditional smokers and the threat of a U.S. ban on menthol cigarettes. For Altria, this was an opportunity to reignite top-line growth. “We are very excited about the future prospects of the cannabis industry and the opportunity for Cronos to position itself for long-term leadership,” concluded Altria CFO Billy Gifford. The Characteristics of Monopolistic Markets, threat of a U.S. ban on menthol cigarettes. Cronos Group has multiple international production and distribution platforms across five continents. Ant Group delay by Chinese gov’t is over financial details and... Pot stocks soar on potential Biden victory, Aurora Cannabis up 40%. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. They stand to collect a large part of the sale proceeds. We even had brand-name businesses drop quite a bit of green into the cannabis space. In today’s environment, Altria’s access to capital is most prized of all. These 5 Beaten-Down Stocks Are Begging to Be Bought, Copyright, Trademark and Patent Information. This is the definition of a long-term bet. Shifts in behaviour were the impetus behind Altria’s multi-billion dollar investments in vape manufacturer Juul and cannabis producer Cronos. However, the investment into Cronos could see some benefits for both parties. While this may allow the tobacco giant to gain a toehold into the pot space at a lower price, Cronos shareholders are going to lose in the long run. 1125 N. Charles St, Baltimore, MD 21201. Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution. Altria purchased $1.8 billion in the pot company’s stock, giving it a 45% interest. Not to alarm you, but you’re about to miss an important event. With a bargain valuation, it’s growing likely that Altria will completely acquire the cannabis producer. Altria Group and Cronos Group are two names making headlines in the medical marijuana industry. But can investors in CRON stock win along with Altria? Altria can acquire the rest of Cronos while barely impacting its financial situation. Altria Group (NYSE: MO) reported its third-quarter earnings as regular smokers seem to be holding steady, but its stake in the vape company Juul Labs and cannabis company Cronos Group (CRON) didn’t fare as well.. Altria took another massive writedown on its investment in Jull Labs. We reached out to both parties, but both declined to offer quotes on the investment. On Oct. 31, InvestorPlace contributor Mark Hake made strong points about Altria’s stranglehold on Cronos. This is a massive upside to the whole deal. This is because companies should be considering that people are people, not products. Nasdaq As long as they each strive to pursue avenues of genuine progress there will be no issue. The investment also comes with brand recognition that looks strong to potential investors. In 1965, more than 40% of U.S. residents regularly smoked cigarettes. High growth projections drive this valuation for CRON stock. Today, CRON stock trades at a 70% discount. Stock futures tilt lower; Election results, Fed decision, Jobs report, and... State of crypto suggests potential for BTC and ETH. In the meantime, Altria can continue pumping money into the company. Think about this for a moment: Cronos Group still had $1.5 billion in cash, cash equivalents, and short-term investments, as of the end of the latest quarter. Juul is a three-year-old company based out of San Francisco, but the e-cigarette producer has already seized three-quarters of the e-cigarette market and boasts a valuation of $16 billion. But this sales growth is largely due to Crono’s small size relative to the bigger pot names. However, in a first of its kind lawsuit filed against the city of New York, a former NYPD officer says he was harassed and…, Terpenes are a powerful, potent part of the cannabis plant that gives the plant its unique taste, smell, and effects. Cronos' share price has tumbled by two-thirds since the equity investment was finalized. The company already controls more than half the board seats, and the valuation is getting ridiculous. While shares are below the strike price of Altria’s warrants, they have every incentive for the Cronos Group stock price to go lower. No matter the initial implications of this investment, time will shed some light on the outcome. Unfortunately, investments don't always pan out as planned, as Altria shareholders have found out in recent months. That figure has fallen nearly every year since. Article printed from InvestorPlace Media, Altria is investing nearly $2 billion for a huge minority stake in Canadian cannabis company Cronos. Thanks to Altria’s backing, the company has the cash to survive as it scales to profitability. Terms of Use. Investment firm Cowen Group predicted in March that vapes would be the top-selling cannabis derivative in the U.S. market, and would trail only dried cannabis flower in aggregate annual sales. Cronos Group operates two wholly-owned Canadian licensed producers: Peace Naturals Project Inc., which was the first non-incumbent medical cannabis license granted by Health Canada, and Original BC Ltd., which is based in the Okanagan Valley, British Columbia. Shares of other cannabis companies rallied after the announcement, as well, with Canopy Growth (CGC) up 4.15% and Tilray (TLRY) up 2.99%. You can learn more about our use of cookies in our Privacy Policy. Altria Group (NYSE:MO) is a giant company. Most people know the name Philip Morris. Market data powered by FactSet and Web Financial Group.

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