TORONTO -- Cronos Group Inc.'s shares lost 28 per cent of their value Thursday after a U.S. short-seller accused the cannabis company of withholding information that could be useful to investors.
The Toronto-based company's stock ended the day at $11.77 on the Toronto Stock Exchange, down $4.60 or 28 per cent, eliminating about a week's worth of gains since Aug. 23.
About 14.7 million shares were traded on the TSX, far above the daily average.
Thursday's decline followed a Citron Research report -- published by short-short seller Andrew Left -- that said Cronos has purposely not disclosed the size of distribution agreements with provinces because they are "so small they could never justify the premium investors are paying for the stock."
Short selling is a trading technique that can produce a profit if a stock's market value falls below a predetermined price.
Cronos hadn't replied to a request for comment by end of the TSX trading day.
Canada's cannabis stocks have been on a tear of late ahead of legalization of recreational use of marijuana on Oct. 17 and recent reports that suggested British alcohol giant Diageo was hunting for potential investments or collaborations in Canada on cannabis-infused beverages.
However, shares of Aphria Inc. and Canopy Growth Inc. -- two of Canada's largest marijuana producers -- were down 1.8 per cent and 3.5 per cent on Thursday after the Citron report.
Short selling can produce a profit if a stock's market value falls below a predetermined price. The technique is used by investment managers and some active individual traders.
Critical reports by Citron have sometimes had dire consequences for publicly traded shares.
Valeant Pharmaceuticals International (renamed Bausch Health Companies) was one of Canada's most valuable companies until Citron alleged the Quebec company set up a network of "phantom pharmacists" to fool auditors. Its shares lost nearly 90 per cent of their value in 2015 amid various controversies.
