Houston, marijuana stocks have a problem.
Despite the industry being forecast to grow by a strong double-digit percentage over the next decade, and perhaps even generating $200 billion in worldwide annual sales by 2030, pot stocks simply can't catch a break as of late. Through this past weekend, the Horizons Marijuana Life Sciences ETF, a cannabis exchange-traded fund with roughly five dozen holdings of various weightings, had declined by close to 60% since peaking on Oct. 15 of last year. Arguably leading the charge lower is Canopy Growth (NYSE:CGC), the largest marijuana stock in the world by market cap.
Canopy Growth may have downside of 28% still to come
In just one year, Canopy Growth has shed two-thirds of its value, working out to more than $10 billion in market cap. As recently as last month, Yours Truly offered a list of 10 reasons why I felt Canopy Growth could fall more than 20% from where it had been trading to less than $20 per share. On Friday, Oct. 11, this prognostication proved accurate, with Canopy Growth closing at $19.43.
However, a sub-$20 share price doesn't mean Canopy Growth is now a value stock. On the contrary, with a number of negatives building, I'd opine that this stock might only be worth $14 a share, and therefore have another 28% downside to come.
First, I'll go over some of the broader issues impacting Canopy and the entire cannabis industry, then I'll offer the specific data that has me believing $14 is where this company is headed next.