Aphria stock has been muted over the past couple of months as investors digest the recent developments from Aphria Inc (TSX:APHA) (NYSE:APHA).
Let's analyze the company's recent developments.
Short Sellers Allegation
Aphria is one of the biggest players in the cannabis industry, and under normal circumstances, one would expect the company’s stock price to be right up there with the other major cannabis companies. However, that has not happened, and the reason behind the bad performance lies in the considerable baggage that Aphria carries.
In 2018, the company came under intense scrutiny after groups of short sellers alleged that Aphria had paid over the market rate for the acquisition of LATAM Holdings and that the then Chief Executive Officer also had an interest in LATAM. In a nutshell, the company’s leadership was accused of corruption. Later on, an independent inquiry was conducted, and it was concluded that the Aphria had not paid over the odds for the acquisition. However, the then CEO had to step down.
Aphria stock is down 0.90% at $7.05 in Tuesday's session.
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Interesting Opportunity for Investors?
This was a cloud over the company for quite some time, which explains why, even after being cleared, Aphria stock price did not really gain much. However, experts now believe that the stench created by that affair is firmly in the past for Aphria, and the current valuation of the stock makes it an interesting opportunity for investors.
Production capacity is one of the most important metrics when it comes to cannabis companies, and in that regard, Aphria is well placed. It is the third biggest cannabis producer, and it has projected that by the end of the year, it will have an annualized capacity of 225,000 kilos.
In addition to that, Aphria is one of the only four companies that has signed a supply agreement with all 10 provinces in Canada and that immediately places the company in a rarefied crowd. Additionally, its partnership agreement with Southern Glazer’s, the biggest spirits and wine distributing company in North America, is also a significant positive.
Last but not least, Aphria Inc is also building up its presence in overseas markets and has acquired a license to grow cannabis in Germany, Europe’s largest economy. In addition to that, it is also present in nine other geographies.
Aphria stock is up about 20% so far this year.
Featured image: Canva
