Aphria Stock Could Gain Momentum on Soaring German Demand

Aphria stock

After a disastrous 2019, which saw Aphria stock fall by more than half, soaring demand in the German market could be a catalyst for growth for the troubled pot stock.

Earnings Disappointment

It's been over a month since Aphria Inc (TSX:APHA) (NYSE:APHA) reported its Q2 earnings, which saw a net loss of C$7.9 million after posting a profit of C$54.8 million in the same period a year earlier. While those earnings were likely dragged down by Aphria's Tier 3 investment, they again highlight the struggles facing cannabis firms in the first full year of legalization as the Canadian market struggles to live up the 'green rush' hype. Since posting those results, Aphria stock has fallen around 30%.

While most of its business on this side of the Atlantic seems to be failing to ignite, the company’s German operations offer some hope of salvation for Aphria investors. Just a week after publishing those disappointing earnings, Aphria stock was bouncing back on news that its ARA-Avanti Rx Analytics subsidiary had secured a European Union Good Manufacturing Practices certification from the Malta Medicines Authority, allowing the firm to ship dried cannabis flower and oils to the EU.

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Opportunity in Aphria Stock?

Aphria Inc is slated to begin production in Germany by the end of the year and has already signed a deal to supply one tonne of cannabis per annum to the German market. Aphria estimates that demand in Germany is approximately five times the current supply, meaning it looks likely that the company could achieve a higher price per gram across the Atlantic.

While the coronavirus continues to wreak havoc on equity markets, it may be best to avoid Aphria stock for now as the current market volatility does not make for an ideal investing environment, although Aphria's current valuation of $4.60 on the TSX could represent a serious bargain as the firm prepares to enter Germany later in the year, while cannabis 2.0 sales could begin to drive some growth in the home markets very soon.

>> Read More Aphria News

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