2019 has been a pretty tough year in the cannabis space, and some of the best-known companies in the sector have seen their stock prices plummet at a remarkable rate in the past months, including Aleafia Health (TSX:ALEF) (OTCQX:ALEAF). Since hitting its 52-week high of $2.23 USD in February, Aleafia stock has crashed by as much as 80%.
Aleafia Stock Under Pressure Despite Impressive Q3 Results
While that is a terrible state of affairs for investors, it should be noted that in Q3 2019, Aleafia Health emerged as one of the few companies to surpass analysts’ expectations in regards to finances. Aleafia's revenue for the quarter stood at $5.3 million CAD, which reflected a substantial rise from the second-quarter revenue of $4 million CAD.
More importantly, Aleafia Health managed to generate a 64% sequential rise in cannabis revenue, as it hit $4.2 million CAD in that particular metric. The company remains one of the lowest-cost producers in the industry and is still trying to ramp up production capabilities significantly. It produced 10,360 kilos of dried flower and still managed to lower its costs.
Last but not least, it should be mentioned that the company’s losses were reduced significantly to $2.5 million CAD in the quarter, which came as a big boost since quarterly losses had been a matter of concern for Aleafia Health.
At the time of writing, Aleafia stock is trading lower by 4% at $0.60.
The company remains one of the more promising ones in the sector, and the drop in share price is largely a sector-wide issue.
Earlier in December, the company made another major announcement. Aleafia Health announced that it had signed a supply agreement with an entity that was simply described as a "Canadian Licensed Producer."
The company announced that it is going to supply 2,840 kilos of dried cannabis flower to this entity. Aleafia is going to pay $2.50 CAD per gram of product and will generate revenue of $7.1 million CAD from the deal. The deal will be completed by January 31 next year, and Aleafia is going to send three shipments.
What do you think about Aleafia stock? Do you think the stock will bounce back in 2020?
Featured image: Canva