Aiming to regain investors’ trust in the CBD sector, Veritas Farms Inc (OTC: VFRM) offers full transparency and high-quality CBD products.
It looks like the cannabis industry isn’t doing that great, or at least that’s the impression you might get if you don’t look closely at the cannabis market.
Companies related to the medical cannabis market have lost as much as 70% of their value over the last 12 months. Cannabis companies were the darling of millennial investors, who were looking to recoup some of their losses after the Bitcoin speculative bubble burst out. It looks like over-eager investors have miscalculated their moves – quotations of cannabis companies, just like cryptocurrency companies, fell off a cliff.
Some cannabis companies might still pleasantly surprise investors
A little over a year ago, we wrote about the “weed rush” from companies listed on international stock exchanges. Today, there is no trace of it. It’s enough to look at the stocks of Canadian companies for which investors had high hopes, like Canopy Growth and Aurora Cannabis. Within 12 months, their stocks went down by about 43% each, while the main index of the Toronto Stock Exchange increased by 10%.
Investors’ expectations were also let down by the American company Tilray. Perhaps that’s too mildly said, because when the price of an asset drops by 78% in a year, we are dealing with an almost irreversible tragedy. Meanwhile, the Nasdaq Composite index rose by 15%.
It is not surprising, therefore, that in the last 12 months, ETF funds investing in companies linked to the cannabis market have also been doing very poorly. Both Alternative Harvest ETF (MJ) and AdvisorShares Pure Cannabis ETF (YOLO) saw their valuations fell by approximately 30%.
Needless to say, against the backdrop of a broad market, these losses look bad.
In the meantime, smaller cannabis companies still show impressive growth. Veritas Farms Inc (OTC: VFRM), a producer and distributor of CBD products, generated more than $2.9 million in total revenue in Q2 2019. That is actually a 500% increase since Q2 2018. The company’s gross profits reached $1,523,413 and thanks to great results, managed to reduce the liabilities by over $1.3 million.
Focused on producing high-quality CBD products, Veritas offers a QR code packaging so that the buyers can check the quality of the company’s products. Furthermore, Veritas controls the whole supply chain, the company has its own 140-acre industrial hemp farm and facility, located in Pueblo, Colorado.
Cannabis companies investors should pay attention to
Who lost out on the bursting of this cannabis bubble? Mainly representatives of the millennial generation. A few months ago, American media reported that, for example, shares of Aurora Cannabis were the most popular assets for investors using the Robinhood application. The average age of a Robinhood user is 32 years.
It is worth noting that the rally on hemp companies in 2018 and its slowdown in 2019 is very similar to the rally on Bitcoin in 2017 and its drop in 2018. History tends to repeat itself and also to rhyme. And investor sentiment does not change, even though investors have better and better tools at their disposal to obtain information or analyze the cannabis market.
It seems that many young and middle-aged investors have switched from Bitcoin to cannabis companies and have lost again. Going further, this may mean that a large part of them will be discouraged from investing, while others will gain valuable knowledge and experience (if they learn from their own mistakes).
This doesn’t mean that you should write off the cannabis industry as an investment opportunity.
Instead of betting on large cannabis companies, investors should turn their attention to small caps, like Veritas Farms. The company has laid the foundation of an empire and is set to become one of the most important players in the cannabis market.