Why is the Cronos (ASX:CAU) share price soaring 45% today?

We check the latest on the ASX medical cannabis company.

| More on:
a medical person in white coat, gloves and protective eyewear uses tools and a test tube to put cannabis buds into the tube for research purposes.

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 Cronos Australia Ltd (ASX: CAU) share price is up in orbit today, leaping 45% at one stage.

At the time of writing, the medical cannabis company's shares had settled at 30.5 cents apiece, up 32.61%, after peaking at 33.5 cents in early afternoon trade.

Cronos shares have spiked over the past few days, leaping from just 20 cents on 30 December.

As well, Cronos shares are trading at 534% of their 4-week average volume today as investors pile into the company to close the session.

Why is the Cronos share price charging higher today?

Before today, the last we heard from the company was on 16 December. Back then, the company announced it had completed its merger with CDA Health Pty Ltd after all conditions were satisfied.

As a result, Cronos Australia now owns CDA Health and the former shareholders of CDA Health collectively own approximately 73.6% of the undiluted capital of Cronos Australia.

Although there's been no remarkable information from Cronos these past few sessions, today the company was asked to respond to an ASX 'please explain' letter.

The ASX wanted Cronos to offer a reason for the change in its share price from 23 cents at yesterday's close to its high of 33.5 cents today.

Cronos confirmed it is not aware of any information that has not been announced for the recent attention to its shares.

However, it acknowledged the CDA merger in its response. Cronos believes the merger will provide a material increase in both size and scale of its operations and a route to early profitability for the integrated group.

With this in mind, the company says the "the potential benefits to the Company from completing the Merger may have contributed to the recent increase in the Company's share price and trading volumes".

It's not an unreasonable explanation. Equity and derivatives traders often 'trade the news', as they say in finance, resulting in short-term volatility that can compound with retail trading activity.

Regardless, the market appears to have viewed the company's most recent advancements in a positive light.

Cronos share price snapshot

In the last 12 months, the Cronos share price has gained more than 145% and it is already up 52% in the first 2 sessions this year.

Over the past month, it has gained 44%. However, prior to its most recent gains, the company was trading fairly poorly, staying within a sideways channel until mid-September 2021.

Nonetheless, it seems Cronos is off to a good start in 2022.

Should you invest $1,000 in Australian Foundation Investment Company Limited right now?

Before you buy Australian Foundation Investment Company Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Australian Foundation Investment Company Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

The author has no positions 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 Gainers

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why Boss Energy, Capstone, Dimerix, and Platinum shares are storming higher today

These shares are having a good finish to the week. Let's find out why.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was the ASX's fourth day of gains for the week today.

Read more »

a man raises his fists to the air in joyous celebration while learning some exciting good news via his computer screen in an office setting.
Share Gainers

Why Cedar Woods, Healius, NextDC, and Platinum shares are charging higher today

These shares are rising on Thursday. But why are investors buying them? Let's find out.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Share Gainers

These were the best-performing ASX 200 shares in April

These shares were in fine form in April. Let's see why they outperformed.

Read more »

Hiker man backpacker with hands up in the summer mountains with cloudy sky.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX made it three from three.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Share Gainers

Why Cedar Woods, Orthocell, PEXA, and St Barbara shares are storming higher today

These shares are having a good session on hump day. But why?

Read more »