- Citron Research says the marijuana company Kronos is one third of its present value.
- In particular, Citron says that Cronos has deceived investors by eliminating key information from disclosure.
- After the note, Cronos fell by as much as 10%.
- Follow Cronos in real time here.
Citron Research – a short trading company with a history of wiping stock prices and managed by Andrew Lev – has a new goal: cannabis stocks.
The report, published on Thursday, states that Kronos, one of the most valuable publicly traded marijuana companies, costs about one-third of its current price: $ 3.50 per share.
"Citron would like to inform investors about the cautiousness of the current and real green haste," the firm said.
"Although advertising is too large and the ban is 100 years from now, it is very important to understand that there are more than 100 licensed producers in the Canadian landscape, and ultimately they will lose more than the winners."
In particular, Citron refers to the lack of disclosure of information from the firm, which trades only in Canada, unlike some of its competitors listed in the US – about major events. First, Citron criticized Cronos's lack of features regarding its supply agreements to the province and notes that all other suppliers, including the competitor Canopy Growth, indicated the amounts they used for delivery.
"Cronos management seems to be deceiving the investment community, deliberately not disclosing the size of its distribution agreements with the provinces – unlike any other major cannabis player," Citron wrote.
"Our sources told us that this is due to the fact that the agreements are so small that they can never justify the premium investors who pay for the shares."
Citron also says that the main tip in May of the Cronos product in Germany was not disclosed to investors.
Cronos is a popular investment among traders at Robinhood, which tend to lean younger than traditional brokers. Currently, more than 96,000 holders are installed in the warehouse, the Robinhood website reports, compared with the month less than 60,000.
Cannabis stocks, including Cronos and its competitors, have shown impressive growth after investment from beverage manufacturers Constellation Brands and Lagunitas, but Citron says that reports that the British Diageo was interested in this space have already made investors pay a new deal in Cronos stock.
"Yes, Diageo will always deal with a company that has a history of infection, and has proven that they can not even produce a small amount of commercial product," Citron wrote. "This is NO EVENT. Citron considers it stupid even to discuss this, but it should be mentioned. "
The Cronos Group representative, who received an email, declined to comment on Citron's report, but said:Our securities offerings have been confirmed by reputable banks, and our esteemed advisers have completed all necessary legal checks in accordance with US and Canadian securities laws. "
Cronos shares fell to 10% on Thursday after the Citron report, but still rose 57% since their debut in March.
Citron and its founder Andrew Left earlier made reports against Click, Inogen, Wayfair, Netflix, and others. Left perhaps best known for his condemning the report for October 2015 what accused Valeant Pharmaceuticals of being a "pharmaceutical Enron" in which he helped raise questions about the firm's accounting and relations with the pharmaceutical firm Philidor.