Sometimes when people ask me, “What do you like to trade?” I’ll half-jokingly respond, “Anything that moves.” Looking at the price action of Cronos Group (NASDAQ:CRON) stock lately, it would undoubtedly be fair to say that this is a stock that moves.
The stock moved from $7.42 to $9.41, and then back down to $8.31 within the span of a week. That translate to dozens of percentage points in both directions for Cronos Group stock. If you can stomach the volatility, then CRON stock might deserve a place on your pot stock watch list. Just don’t mortgage your house to buy shares or anything like that.
A Big Company in a Cash-Abundant Market
It seems like everybody’s got an opinion about marijuana legalization nowadays, but no one can deny that massive amounts of capital have poured into the cannabis industry. And this capital could, at least in theory, be put to good use. University of Colorado Boulder’s Jacob Kirsch agrees.
“Legal cannabis provides the opportunity to generate tax revenue for a state that may fund important programs in education, health, and law enforcement. … States currently prohibiting adult-use cannabis which may consider legalization in the future may consider potential tax revenue to be of primary concern,” Kirsch wrote.
Cronos Group has been a major player in the pro-cannabis movement. As more and more lawmakers soften their stances on marijuana policy, I expect CRON stock holders to benefit over the long term. Since Cronos Group stock has plenty of volume and a market capitalization of $2.6 billion, owning shares is a simple and straightforward way to stake your claim in the global cannabis revolution.
But since it’s a budding industry (you can count on me to provide InvestorPlace’s most painful puns), cannabis stocks are prone to sizable moves in both directions. Cronos Group stock closed slightly more than 6% down on Oct. 18 and the message-board stock gurus didn’t even blink. It’s just another day in the world of pot stocks, you see.
The Wild “Mystery Rally” in CRON Stock
Even the most jaded message-board jockeys, however, were stunned to see the CRON stock price move 41.5% (to the upside, thankfully) in after-hours trading on Wednesday, Oct. 16.
Perhaps even more amazing than the magnitude of the move is the fact that, believe it or not, no one knew what caused it. There was no catalyst, no earnings report, no media headline, no analyst upgrade. There was nothing to precipitate such a move in the CRON stock price.
Was this a concerted effort among a cadre of trading whales? Not really, as it was disclosed that someone (or something, if it was an institution) bought a block of 500,000 Cronos Group stock shares at $10.44, followed by a block of 230,000 shares at $10.35 and then another 500,000-share block at $10.13.
Bear in mind that CRON stock had been trading at less than $9 per share up to that point. Evidently, somebody wanted Cronos Group stock shares very badly. And they had the wherewithal to buy those shares at just about any price.
Is that a reason to feel bullish about CRON stock? Maybe, as one might conclude that there must have been a reason for this gigantic series of share purchases. Or, we can be a bit more level-headed and take our cues from Stifel analyst Andrew Carter, who recently dubbed Cronos Group the “New King in the North.” Citing the company’s $2 billion CAD worth of available cash, he gave Cronos a “buy” rating and a price target of $14 CAD. That’s $10.66 in U.S. dollars.
My Takeaway on Cronos Group Stock
With or without a “mystery buyer,” I’m prepared to wager on the global legal cannabis market expanding through the next several years at the very least. CRON stock is a solid performer in this space, so feel free to jump in and order some shares for yourself. It’s no “mystery” that this is a great company and a great stock.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.