Earlier today, Aphria Inc. (TSX:APHA)(NYSE:APHA) announced the resignation of its president, Jakob Ripshtein. Effective from June 7th, there’s no reason given for his departure or who might replace him. Interestingly, Aphria stock is climbing on the news; shares are up 2.30% and selling for $9.35 on the TSX.
Is it possible that investors are delighted that another executive is leaving?
Ripshtein became the company’s president in November 2018 after first serving several months as its chief commercial officer.
Only weeks after taking the post, a short-seller report caused Aphria stock to plunge. This report suggested that management purposefully over-paid for Latin American assets in order to line their own pockets.
A special committee was soon appointed to assess the validity of the short-seller claims.
The committee found the accusations to be false. Saying that “although Aphria’s Latin American acquisitions were “near the top of the range” in the price paid to acquire them, they were still within an “acceptable range” compared to similar acquisitions by competitors”.
However, the company had to take a $50 million CAD write-down on the value of those, now infamous, assets:
“Just a few months later an impairment test on these assets requested from the Ontario Securities Commission resulted in a write-down that pushed Aphria to a $108.2 million CAD net loss in Q3 2019.”
Management Reshuffle and Stock Struggles
Aphria stock has had a very tough recovery despite the special committee, effectively, acquitting management of the damaging accusations.
It also hasn’t helped shares that, since the controversy, a slew of executives have left the company. This includes former CEO Vic Neufeld and co-founders Cole Cacciavillani and John Cervini.
Ripshtein and Aphria’s Chief Financial Officer Carl Merton are the only two executive members of staff who stayed in office after the controversy and were both in office before it.
Call it ill-luck for Ripshtein, but it’s plausible that investors simply don’t trust those who held office around the time of the controversy.
There’s no doubt about it but the reports truly sparked turbulence for the cannabis producer and recovery has been fraught with obstacles.
But what do you think? Is Aphria stock reacting to Ripshtein’s departure?
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