European cannabis stocks took a hammering this week, with the average drop in share price among BusinessCann’s tracked companies hitting -8.49%.
It came amid dramatic announcements from monetary policy authorities in both the UK and US, seeing the US Federal Reserve raise interest rates by 75 basis points, the largest hike in nearly 30 years.
Conversely, the Bank of England’s Monetary Policy Committee came under fire for failing to take similar drastic action to curb inflation, raising interest rates by just 25 basis points while revising its forecasts for peak inflation for the 8th time to 11%, nearly six times its 2% mandate.
MGC Pharmaceuticals has had a rollercoaster week on the stock market, joining its LSE-listed companions in dropping by double digits before experiencing a sharp recovery.
By Wednesday June 15, MGC’s stock had dropped nearly 20% in a week, mirroring the likes of Kanabo and Cellular Goods who both saw stocks dive over 15% this week.
However, unlike its peers, MGC saw its stock price recover sharply after it published the results of a two-year study into the effects of cannabinoids on Glioblastoma multiforme cells, a fast-growing and aggressive form of brain cancer.
Crucially, the results seemed to suggest that MGC’s own cannabinoid treatment, which uses a combination of CBD and CBG, ‘can potentially be used as a treatment in cancer patients without the inclusion of toxic agents’.
MGC said it now plans to advance to clinical trials, adding that this will make a ‘crucial addition’ to its intellectual property portfolio, and was a ‘transformative step forward in the treatment of aggressive brain cancers’.
Investors appeared to agree, with trade volumes skyrocketing following the news, and MGC’s share price jumping as high as 24%.
While its share value looks set to continue to rise, its sharp recovery only brings its share price to where it stood around a week ago, and is still less than half its share price six months ago.
The Aquis listed British cannabis cultivator was another to experience a double-digit drop in its share price this week, after it released its unaudited preliminary full-year figures for 2021.
The young grower, which started its initial research phase and began growing crops at its recently completed facility in Lincolnshire in February, saw its share price dip over 13% this week.
In the year to January 31 2022 Ananda, which remains pre-revenue, said that losses nearly doubled year-on-year to £970,343, equating to a basic and diluted loss per share of 13p.
Meanwhile its net assets dropped from £831,037 to £288,016, which its attributed mainly to its subsidiary DJT’s construction costs.
During the period DJT Plants received its Home Office Licence to cultivate cannabis plants for research purposes, then built its facility in a total of seven months, before entering its initial growing phase.
It said that work has ‘progressed’ on securing a commercial licence from the home office, alongside planning for a larger footprint in order to commence its next phase of commercial cultivation.
Looking ahead Ananda said it was focused on ‘supporting the growth’ of DJT Plants through the provision of ‘capital and operating funds, as well as the leadership and management skills’.
Its efforts on this front so far have proven fruitful, with its share price jumping 30% in early May after it announced three heavyweight additions to its cultivation team.
Despite the recent drop in value, Ananda’s shares have remained relatively stable in the face of significant headwinds felt throughout the wider industry, though this could be as much down to its size as its financial prospects.
The Israeli cannabis operator, which says it is the fastest growing cannabis company outside North America, also saw its stock drop around 7% this week.
While this was below the average weekly loss, and reflected a wider downturn in the Israeli cannabis market, one report published this week suggested short positions against the company had risen by 60% last month.
According to data from MarketBeat, short interest in the company stood at 85,800 shares on May 15th, but rose to 138,000 by the end of the month, representing around 0.5% of the company’s total stock.
A number of hedge funds have also recently modified their holdings in the stock, with Citigroup buying an additional 5071 shares, raising its total stake to $36,000 during the first quarter.
Davy Global Fund Management, Vident Investment Advisory, Virtu Financial and Penserra Capital Management all also purchased shares worth a total of $641,000 over the same period.