Wednesday morning saw stock market declines as investors sought out contradictory signs about the state of the US economy and uncertainties surrounding Britain's upcoming exit from the European Union. At 11:30 EDT, the Dow Jones Industrial Average (DJINDICES: ^ DJI) lost 128 points to 25,529. The S & P 500 (SNPINDEX: ^ GSPC) dropped 21 points to 2,797 and the Nasdaq Composite (NASDAQINDEX: IXIC) dropped 81 points to 7,610 , 19659005] The Dow does not like frequent changes to the list of the 30 stocks of the industry average, but sometimes member companies force their hand. The group overseeing the Dow announced that DowDuPont (NYSE: DWDP) will be replaced with one of their parts after being split into three separate companies. In the high-flying marijuana industry, the Canadian pot specialist Cronos Group (NASDAQ: CRON) dealt with a downgrade after a earnings report raised concerns about its future.
Like now, Dow?
DowDuPont's shares fell 1% on Wednesday morning after the S & P Dow indexes announced late Tuesday. The company, which oversees the build-up of key stock benchmarks, including the S & P 500 and Dow Jones Industrial Average, said DowDuPont will be replaced by shares in Dow Inc., which trades under the ticker symbol DOW. The move will take effect next Tuesday morning, April 2, following the spin-off of Dow by DowDuPont.
Investors have been waiting for more than one and a half years for DowDuPont to begin the split-up process and are expecting an opportunity to target investments in the conglomerate businesses they like best. Dow Inc. will receive the bulk of the combined materials company's assets in materials science, while the agricultural side of Corteva Agriscience will be renewed to produce seed, biotech and crop protection products. The old name of DuPont will include the Specialty Chemicals business, which includes electronics, transportation, nutrition and life sciences.
Dow Inc.'s revenue will be the largest of the three, but some were skeptical. The surviving company would be big enough to maintain its place among industrial companies. Without an obvious alternative to representing the chemical industry, it still makes sense to represent Dow in the Dow and also advocates the apparent confluence in their respective names.
Cronos goes from high to low
Meanwhile, Cronos Group shares fell more than 10% on Wednesday morning, adding their slight decline on Tuesday. The cannabis company was downgraded from hold-to-sell by Canaccord analysts, who kept their price target of $ 17 or about $ 12.67 a share.
Canaccord believes that Cronos has not seen growth in the opening of Canadian cannabis for recreational purposes, which many investors had hoped for. Although analysts are prepared to look at the growth potential of the industry as a whole in the long term, however, it is daunting for Cronos to lag behind its rivals early on.
This concern was reflected in the results of the Cronos Group results were announced Tuesday morning. Although Cronos acquired the US Cigarette giant Altria Group for an investment of $ 1.8 billion to acquire a 45 percent stake in the marijuana maker, Cronos could not provide an impressive Sales growth and rose only by 49 percent. to 5.6 million CAD. That's less than a tenth of the revenue that the biggest player in the field brought, and it lagged well behind the other big manufacturers.
There's still time for Cronos to keep up with his colleagues, and Altria's resources could be big assets. Nevertheless, Cronos can not waste time in a fast-growing industry, or he may suffer the fate that Canaccord seems to foresee in his view of marijuana stock.