Over the past few months, plenty of marijuana stocks experienced massive falls due to a general sense of uncertainty about the next stage of growth for the sector as a whole. Aleafia Health (TSX:ALEF) (OTCQX:ALEAF) was among those stocks and over the past months, Aleafia stock has shed as much as 62% from its peak in February.
However, the reason behind Aleafia Health’s fall is different, and it can be traced back to March when the company completed the acquisition of Emblem, a firm that produces medical marijuana. However, in order to complete the purchase, Aleafia had to dilute its shares, and that was not something that was welcomed by its investors. It resulted in a sharp downward spiral for Aleafia stock.
That being said, it cannot be denied that the acquisition has been a good one for the company. The acquisition resulted in record sales, and right after the merger had been finalized, Aleafia Health managed to complete a sale worth $1,000,000. In addition to that, this move has taken the company’s production capabilities to 138,000 kilos a year, and it is expected to rise further.
Aleafia stock is trading lower by 1% at $0.75 in Friday’s trading session.
On top of that, Aleafia has also announced that its Port Perry Outdoor Grow facility is also going to be expanded to 1.1 million square feet from 292,000 square feet and that could propel Aleafia among the top cannabis producers in Canada.
The rise in sales has actually come to pass in the second quarter of the year. Earlier on in August, Aleafia Health announced its results, and the sales figures proved to be a record for the company. In Q2 2019, the company’s revenues rose to $3.95 million CAD, and that reflected a 159% year-on-year rise.
Hence, the company’s current stock price may not be entirely representative of its prospects, and if it can continue to drive sales, then Aleafia stock could rise significantly in the future.
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