This morning Cronos (CRON.Q) shot out of the gate hitting a high of $13.42, up from $11.50 on the open, and is sitting at $12.68 with 12.2 million shares as of 1:42 PM EST.
Yesterday we released a story detailing the lawsuit and shorting effort by Rosen Law Firm and Citron Research against Cronos (CRON.Q). In barrage of press releases and media appearances the two outlets went hard at Cronos for not only being ‘overvalued’, but also for engaging in investment fraud. The overvalued claims are an opinion and there could be a case to made there, but investment fraud claims didn’t have much behind them.
Citron is claiming that it was fraudulent for Cronos not to announce the amounts of cannabis it would be supplying to the Canadian provinces. The MOU’s between the provinces and the companies were laid out as the right to purchase cannabis, not a contractual obligation to buy x amount. Any press releases that came out regarding amounts and MOU’s were amounts allocated, not amounts that will be sold. There is a big difference, but that seemed to be lost on Citron’s Andrew Left who dodged several questions on a not so stellar CNBC appearance yesterday.
Cronos CEO Michael Gorenstein responded to the report yesterday on BNN by saying:
“I’m not able to comment on short seller reports at this time, but I can assure that all of our public offerings have been fully underwritten and we’ve had top legal advisors review our disclosure,” Gorenstein said. “We are very confident in our disclosure to the market.” – Michael Gorenstein, CEO, Cronos