Weed Stocks In Focus After Earnings

Shares of Tilray and Canopy Growth are in the red after earnings

Wall Street today is reacting to quarterly results from Canadian marijuana firms Tilray Inc (NASDAQ:TLRY) and Canopy Growth Corp (NYSE:CGC). Both stocks are set for sharp declines at the open, after the companies each posted larger-than-expected losses for the third quarter. Also in focus is cannabinoid therapeutics expert GW Pharmaceuticals PLC (NASDAQ:GWPH), following bullish analyst attention.

Starting with TLRY stock, it's down 3.2% in pre-market trading. The shares initially rose after the third-quarter report was released as traders reacted to an impressive 86% rise in revenue for the period, but growing expenses have overshadowed the sales growth. Meanwhile, Tilray CEO Brendan Kennedy told investors that the departure of U.S. House Rules Committee Pete Sessions opens up potential voting on medical cannabis measures going forward. It's worth noting, too, that the quarterly results didn't capture last month's legalization of recreational marijuana in Canada.

While the security's 3.5% pullback would obviously be disappointing to bulls, the price action is a far cry from the volatility options traders were expecting. TLRY shares had mostly been drifting lower since a massive spike to $300 in mid-September, closing Tuesday at $111.55.

Rival CGC, meanwhile, is facing a steeper 10% loss when the market opens. Revenue for the period rose 33%, while the number of medical marijuana patients grew by 34% to 84,400 during the quarter. Even if the pre-market losses come to fruition, though, Canopy Growth would still be above the 180-day moving average that contained its last two pullbacks. The equity closed at $38.48 yesterday, and traded as high as $59.25 in mid-October.

Outside of earnings, GW Pharmaceuticals is getting attention at Leerink, which started coverage on the drugmaker with an "outperform" rating and $185 price target. GWPH shares have been choppy on the charts in recent months, though the 320-day moving average has stepped up as strong support, cushioning the pullback yesterday before a close of $132.18 for the equity.