It has been a good week for ALEF stock investors as Aleafia Health (TSX:ALEF) (OTCQX:ALEAF) recovered sharply from its recent fall.
ALEF Stock is Volatile
Aleafia Health proved to be one of the most volatile stocks in the cannabis sector towards the end of 2018. Although the sector is volatile in itself, Aleafia stock nosedived to $0.94 a share from $2.40 on the OTC market back in September and eventually ended 2018 at $1.02 a share. Again in 2019, by February, the stock moved back to as high as $2.10. However, ALEF stock could not be sustained at a higher level and recently fell to as low as $0.74 earlier this week.
However, it seems that those dark days are over (at least for now) after the company announced that it had closed a convertible debt offering of $40.25 million that will allow the company to strengthen its business considerably. The news was well received in the market, and soon Aleafia shares soared by as much as 40% in just two sessions of trading.
Emblem Acquisition
On the other hand, the acquisition of Emblem has been a particularly positive development for the company, since it will raise its production capabilities significantly. The combined entity will be able to produce 138,000 kilos of cannabis a year and help Aleafia Health in working towards its goal of being one of the top 10 producers. Moreover, the deal will also bring 40 more clinics under Aleafia’s control.
The company has also started making meaningful inroads into the international market over the past months.
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ALEF stock has recovered 40% from the recent low of $0.96 on the TSX. Aleafia stock is now down 1% on the OTC market.
By virtue of the Emblem deal, a German joint venture named Acnos Pharma GmbH came under Aleafia's control, and it is believed that the company is going to use the German company to create a supply chain infrastructure that will be fit for the growing medical cannabis market in Germany. Aleafia will have 60% control of the joint venture and Acnos’s agreement with 20,000 German pharmacies in addition to 110 distributors makes it a particularly important venture for the company.
Aleafia Health has also picked up a 10% stake in CannaPacific Pty Limited, an Australian cannabis firm. Even more importantly, it has been awarded an import permit by the Australian Office of Drug Control. As soon as it receives the export license from Health Canada, its international business could pick up pretty quickly. That being said, the company still has to prove that it can deliver on what looks like a promising business, and hence, experts believe that it will take some time before the stock can gather any significant momentum.
ALEF stock is down almost 45% from its recent high of $2.05 and almost 70% from its 52-week high of $3.62.
Featured image: Canva
