Aphria stock is down over 50% from its 2019 peak price despite Aphria Inc (TSX:APHA) (NYSE:APHA) posting better quarterly results than previous quarters. Let's analyze the recent performance.
Key Analysis
While it is true that many cannabis companies have suffered over the past few months due to a range of disparate factors, there are some exceptions, and Aphria is certainly one of them.
Aphria is one of the only companies in the industry that has managed to turn a profit, and it has done so for the past two quarters. However, recently, Aphria stock has dropped by as much as 50%, and questions are now being asked about the nature of the profits that have been made by the company so far. That being said, there are still a lot of positives to be considered.
One of the most important moves from Aphria over the past months has been the establishment of CC Pharma, its German subsidiary. The operation from the subsidiary has allowed the company to supersede larger players like Cronos (TSX:CRON) (NASDAQ:CRON), Aurora Cannabis (TSX:ACB) (NYSE:ACB), and Canopy Growth (TSX:WEED) (NYSE:CGC) as far as fundamentals are concerned.
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The company is currently the fourth-biggest cannabis company in terms of market cap, and in the latest quarter, it reported a cash pile of $464.3 million. At a time when the industry is going through a slump, it is always a big advantage for a company to be cash-rich, as this means it can then invest in its own projects if credit dries up for the sector.
Despite all that, there is now a lot of negativity surrounding APHA stock, and some experts have even gone so far as to say that its profits are only on paper.
Aphria stock, which had jumped to as high as $14.00 CAD earlier in 2019, now it trades at around $7.00 CAD and suffered further declines recently after analysts refused to be optimistic about the company despite its impressive financial performance.
What do you think?
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