Cronos Group (NASDAQ: CRON) is the latest marijuana stock to post substantially better-than-expected financials this earnings season. The company released results for its fiscalÂ second quarter of 2019 today, and they were surprisingly robust.
For the quarter, Cronos booked net revenue of 10.2 million Canadian dollars, which was more than three times higher than the Q2 2018 figure. (Note: All figures in this story are in Canadian dollars unless otherwise specified.) This was on the back of 1,584 kilograms of product sold, again more than triple the result of the year-ago quarter. That CA$10.2 million was significantly higher than the CA$7.3 million expected by analysts.
The bottom line showed a profit of nearly CA$251 million (CA$0.75 per share). However, this was due to an accounting gain of almost CA$264 million on the revaluation of derivative liabilities. The Q2 2018 net profit was around CA$762,000, less than CA$0.01 per share. For the most recent quarter, analysts had projected a CA$0.03 net loss.
Cronos' results come close on the heels of big revenue gains for other marijuana stocks as the industry continues to expand dramatically. One driver of this is recreational marijuana in Canada, which was legalized relatively recently (in October 2018). Another is acquisitions; it's common for top marijuana companies to buy assets in order to bulk up.
This is a rising tide that is lifting more than a few boats. For example, Aurora Cannabis (NYSE: ACB), which just unveiled preliminary figures for its fiscal Q4, expects to post a more-than-fivefold increase in revenue. And GW Pharmaceuticals (NASDAQ: GWPH) recently reported a Q2 top line that grew to $72 million U.S. from barely over $3 million in the same period of 2018, thanks to the success of a cannabis-based drug.
Cronos has gone the acquisition route several times and looks to continue doing so. Its most recent purchase was for the Lord Jones line of CBD-infused personal-care products. This $300 million U.S. deal for the California-based business gives it a foothold in the potentially very big American CBD personal-care market. The purchase is expected to close imminently.
Although Cronos stock initially jumped on the earnings news, it has since slid into negative territory -- it's down 3% on the day.
This article was originally published on Fool.com