ZGNX - Down 43% in 7 Months Is GW Pharmaceuticals Now a Buy?
This was expected to be the year that everything went right for the cannabis industry. To our north, Canada had become the first industrialized country in the world to legalize recreational marijuana and commenced sales in October 2018. Derivative products were also presumed to hit dispensary shelves by no later than October 2019. Meanwhile, numerous states in the U.S. have been pushing toward legalization in what should be the most lucrative cannabis market in the world.
But these visions of grandeur quickly went up in smoke once the first quarter came to a close. Direct marijuana players in North America were clobbered by a confluence of factors, including supply issues in Canada and high tax rates in select states. But perhaps the biggest surprise is that ancillary players were hammered, too.
Cannabinoid-focused drug developer GW Pharmaceuticals (NASDAQ: GWPH), for example, has lost 43% of its value on a trailing-seven-month basis (through Dec. 22) since hitting its yearly high on May 22. Is this dip in one of the more popular pot stocks deserved, or could this be an incredible buying opportunity? Let's take a look.