Aphria stock has been on a downward spiral since posting its Q2 earnings last month, with the company blaming a delay in opening additional Ontario cannabis stores and a ban on vape products in Alberta for its underperformance.
Aphria (TSX:APHA) (NYSE:APHA) posted its Q2 earnings in mid-January, which included a net loss of C$7.9 million; in the same period last year, the company posted a profit of C$54.8 million. Aphria did manage to increase its net revenue to C$120.6 million, but the Leamington-based firm slashed its outlook due to a variety of reasons, including the Alberta vape ban and delays in opening additional Ontario cannabis stores. The company is now expecting 2020's net revenue to be between C$575 million and C$625 million.
Since the release of those earnings, Aphria shares have fallen over 25%.
Ontario and Alberta Struggles Hamper Aphria Stock
The company has been provided some solace in the Ontario market since those earnings, with the province recently announcing that it would abandon the controversial lottery-based system that allowed only 25 Canadians to open pot stores in Ontario last April, and limited new store openings until the spring at the earliest. Aphria stock is currently trading for $5.54.
Aphria has also been hampered by a delay in launching vape products in Alberta, despite them being legal throughout the rest of Canada since December. "They've been a little bit tight-lipped on the full details of it. They just want to take the right steps for their consumers," chief executive Irwin Simon said. "Based on those conversations, we feel that that's an April decision, not something that's going to happen in the next two, three weeks."
Despite these headwinds in the domestic market, there is an argument that Aphria stock could potentially see some serious gains from overseas operations. The company has been awarded a contract in the burgeoning German market to produce one ton of cannabis there per year, beginning in the second half of 2020. It is estimated that demand in Germany is already exceeding supply by a rate of five to one, which means the company could likely capitalize on a higher selling price per gram.
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