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Bud vs. Bud: Can Cannabis Crush Big Beer?

Despite a full slate of controversial news including Michael Cohen’s testimony, the US-North Korea summit, and military tension between India and Pakistan, the major averages remain relatively quiet heading into the weekend.

Stocks meandered once again Thursday, led lower by the Nasdaq Composite’s slide of a little less than 0.3%. Meanwhile, the Dow dropped almost 70 points, putting the blue-chip index on track to post its first down week of the year.

A few stray earnings announcements continue to trickle in. But the real drama everyone’s talking about involves a controversial electric car company and its eccentric CEO…

Elon Musk just announced Tesla is ready to sell its highly-anticipated $35,000 version of the Model 3.

But there’s a catch…

“Today, Tesla has to pay back $920 million in debt,” our own Mike Burnick notes. “The only way Tesla could have avoided this payment was if the stock rose roughly 14% yesterday. That’s wasn’t very likely, and $920 million isn’t chump change.”

Frankly, I’m sick of writing about Tesla. But Musk has managed to hog the financial media spotlight this week with his Twitter antics, which have once again attracted the ire of the Securities and Exchange Commission. So now we can throw possible contempt charges onto the flaming pile of cash.

“Making matters worse are the underlying fundamentals of the business,” Mike continues. “Tesla laid off 3,000 of its employees in mid-January. You don’t start mass layoffs if you expect business to take off.”

Speaking of layoffs, Elon’s big announcement on the arrival of the $35,000 Model 3 comes with — you guessed it — more layoffs! The company is transitioning many of its stores into galleries and moving sales online to help make the $35,000 price point a reality.

Musk also noted during last night’s announcement that the company probably won’t turn a profit this quarter. Following the after-hours drama, the stock is set to open lower by more than 3% today.

If the Tesla drama has your head spinning this week, maybe you need to relax and enjoy a smoke with Martha Stewart.

“Lifestyle guru Martha Stewart is teaming up with the world’s largest cannabis company,” Bloomberg reports, “taking on an advisory role at Canopy Growth Corp. (NYSE:CGC) to help develop a ‘broad new line’ of products for both humans and animals.”

I’m sure Martha makes amazing brownies. So why not add a new secret ingredient to the mix? Canopy has already started clinical trials to show how cannabis can improve users’ health. So getting the Martha Stewart seal of approval will probably lead to more than handful of new cannabidiol products to treat a variety of ailments in humans and pets alike.

I think it’s safe to say the stigma surrounding cannabis use is quickly lifting. Plus, Martha Stewart already co-hosts a cooking show with Snoop Dogg. Signing with cannabis company was simply the next logical step…

As for the stock, shares of CGC jumped almost 4% yesterday. It’s now approaching a potential breakout zone that could ignite its next leg higher.


While cannabis attracts more positive press by the day, old-school alcohol brands are falling on hard times.

“It’s a brutal time in the beer business,” Business Insider reports. “Sales are falling. Some of the most iconic brands are struggling. And, as millennials have cut beer out of their consumption habits, Gen Z is threatening to avoid drinking altogether.”

It’s tough trying to survive in the booze business these days — especially when it comes to beer.

“Cowen & Co. analysts, in a recent research note, said that 2018 looks to have been the ‘worst year for beer sales’ in the nearly decade-long period it has covered the alcohol industry,” Investor’s Business Daily notes.


That’s why companies like Molson Coors Brewing Co. (NYSE:TAP) are turning toward the cannabis market to potentially add billions in sales. But even with their foray into the weed biz and expensive ad campaigns, TAP and Anheuser-Busch InBev (NYSE:BUD) have some monumental work to do to repair the damage.


Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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