Shares of Cronos Group (NASDAQ: CRON) dropped 7.7% as or 11:41 pm EST on Wednesday after sinking as much as 11.5% earlier in the day. Investors appeared to be testing the downgrade of Cronos stock by GMP Securities yesterday from "buy" to "hold." Canadian marijuana stocks, in general, also fall as a group on Wednesday, part due to Aphria 's (NYSE: APHA) board of directors rejecting a hostile takeover attempt by Green Growth Brands .
What does today's news really mean for Cronos Group? Nothing. Absolutely nothing
GMP Securities analyst Martin Landry admitted in his note to investors that his downgrade of Cronos was based on any fundamental issues with the company . Actually, Landry continues to think that the company's prospects are very good. But he thinks that "need a breather" after Cronos Group's big run-up this year.
It's not surprising that many Canadian marijuana stocks fell after Aphria rejected the buyout bid at Green Growth Brands. You can look at the charts of these stocks and see that they often move as a group. However, Aphria's decision has nothing to do with Cronos. The price is well below Aphria's current share price.
The downgrade to Cronos Group and the general pullback for marijuana stocks are basically noise. Short-term traders pay attention to noise, but long-term investors are better off ignoring it.
Cronos Group's share price might take a breather, but the company won't. Cronos is busy in the Canadian recreational marijuana market and the global medical marijuana market. Altria
These are much more important for investors to watch for Cronos Group than the daily fluctuations in the stock price. You can probably count on continued volatility, though. Cronos Group's growth prospects look great, but its stock has high expectations for this growth. Any news – good or bad – could cause significant swings in Cronos' share price.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.