Shares of Cronos Group Inc., a Canada-based marijuana company, plummeted on Thursday after noted short seller Citron Research accused the company of witholding information from its investors and giving it a dismal price target.
Shares shed about 28% of their value after a Citron Research report, published by short-short seller Andrew Left, accused Cronos of purposely not disclosing the size of distribution agreements with provinces because they are “so small they could never justify the premium investors are paying for the stock.”
“Our sources have informed us that it’s because the agreements are so small they could never justify the premium investors are paying for the stock,” Citron Research said.
According to Cronos’ advisers, the company had done “all the necessary due diligence under both US and Canadian securities law.”
“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,” Citron also said.
Citron gave the stock a price target of 3.50.