Cronos stock tumbles after Citron makes short call, sets $3.50 price target

Shares of marijuana company Cronos Group Inc. CRON, -6.51% are down 8.4% in Thursday morning trading after noted short seller Citron Research made a bearish call on the stock. He set a price target of $3.50, 70% below the stock’s recent price of $11.66. "Although the hype is big and the prohibition after 100 years is real, it is critical to understand that in the Canadian landscape, there are over 100 licensed producers and there will ultimately be more losers than winners," the Citron analysts wrote. Canada is about to fully legalize recreational marijuana on Oct. 17. They argue that Cronos’s management "appears to have been deceiving the investing public by purposely not disclosing the size of its distribution agreements with provinces – unlike every other major cannabis player." Marijuana stocks have been hot in recent weeks. Tilray Inc. TLRY, -4.03% shares soared recently after the company’s recent earnings report, and pot stocks in general have benefitted from enthusiasm about the potential for more partnerships with beverage makers. Cronos shares have gained 93% so far in August, while the S&P 500 SPX, -0.08% has risen 3.4%.

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