Why the Little Green Pharma (ASX:LGP) share price has lost 20% since July

The medicinal cannabis producer's shares have fallen heavily in recent times…

| More on:
Hipster man puts head in hand as he talks on phone in front while sitting at a desk.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Little Green Pharma Ltd (ASX: LGP) share price has had a tough run over the past few months. This comes despite the medicinal cannabis producer releasing some positive announcements to the market of late.

At Friday's closing bell, Little Green Pharma shares finished the day down 2.04% to 72 cents apiece. They are now down 22.5% since the start of July

What has Little Green Pharma recently announced?

In late August, Little Green Pharma released its preliminary report for the 2021 financial year, highlighting mixed results.

The company generated more than $7 million in revenue, up 218% over the prior corresponding period. The robust performance came from the sale of medicinal oil and flower products.

On Little Green Pharma's bottom line, profit after tax came to $24.6 million, an improvement from the $9.3 million loss in FY20. While this appears a sound performance, the $25 million gain on the purchase of the Denmark facility bumped up the end result.

In addition to the result, Little Green Pharma was granted a Schedule 9 licence to supply psilocybin by the Western Australian government. The licence is a key element of the company's entry into the international field of psychedelic drugs to treat mental illness.

Furthermore, Little Green Pharma successfully imported its first shipment of its THC 16 cannabis flower medicine from its Danish facility into Australia. The Little Green Pharma share price jumped on this news.

Regardless of the positive progress, Little Green Pharma shares have tanked from the beginning of July. Its peers too, Creso Pharma Ltd (ASX: CPH) and Althea Group Holdings Ltd (ASX: AGH) have not been immune. They have fallen 12.5% and 27%, respectively.

A possible catalyst for the fall could be weak investor sentiment as the cannabis sector has been slow to take off. In 2018, there was massive hype in cannabis products, but this has since waned.

About the Little Green Pharma share price

Over the past 12 months, Little Green Pharma shares gradually moved upwards to advance around 150%. The strong accent came off the back of late 2020 where the cannabis sector took off following optimistic investor sentiment.

However, in 2021, the company's share price moved relatively sideways, registering gains of approximately 30%.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Broker Notes

Why DroneShield, Nickel Industries, and CSL shares could be best buys

Let's see why Bell Potter is so bullish on these shares.

Read more »

A group of executives sit in front of computer screens in a darkened room while a colleague stands giving a presentation with a share price graphic lit up on the wall
Opinions

2 ASX 200 large-cap shares that this fundie is cashing in after phenomenal growth

Shaw and Partners portfolio manager James Gerrish says he knows this will be an 'unpopular call'.

Read more »

Animation of a man measuring a percentage sign, symbolising rising interest rates.
Share Market News

Here's what Westpac says the RBA will do with interest rates next week

Are interest rates heading lower again? Let's find out what the banking giant is predicting.

Read more »

A handsome smiling man sits in the front seat of an electric vehicle with his hands on the wheel feeling pleased that the Carsales share price is going up and the company will shortly pay its biggest dividend ever
Share Market News

Are electric vehicle stocks a good investment today?

Did US President Trump just kill the EV industry?

Read more »

Hands reaching high for a trophy with a sunset in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a cracking end to the trading week for ASX investors.

Read more »

Two brokers analysing stocks.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman and man calculating a dividend yield.
Opinions

Buy or bail? Fundie's verdict on 2 ASX 300 shares

Stuart Bromley of Medallion Financial Group provides his insights.

Read more »

A man analyses stockmarket graph on his computer.
Share Market News

US stocks vs. ASX shares in FY25

Would you be surprised to learn that ASX tech shares rose faster than US tech stocks by almost 2:1?

Read more »