Auxly stock has gained momentum over the past week as the broader cannabis sector recovered on value buying. Let's analyze the recent developments from Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF).
It is now a well-established fact that the cannabis industry went through a bit of a downturn over the course of 2019, but that should not deter investors from tracking highly promising companies.
Key Analysis
The company is currently one of the fastest-growing firms in the cannabis space, but it is also important to point out that Auxly has held off its production in order to use its cannabis for derivative products, which means it hasn't been making much money as of yet. In the past nine months, it has only recorded a total of C$5 million in sales. However, experts believe that much of Auxly Cannabis Group’s revenue will be generated in 2020, now that derivative products are legal in Canada.
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Auxly stock has gained 28% so far this week. With derivatives about to take off, will the gains continue, or will yet another setback stall this pot stock?
Along with the revenue expected to come in from derivative products, the investment of the United Kingdom-based tobacco company Imperial Brands (OTCQX:IMBBF) in Auxly is also an important competitive advantage for the company. Auxly is going to get access to Imperial’s vaping tech, and that could help the company in stealing a march over its peers.
While it is true that Auxly Cannabis Group is still not a profitable company, the company believes that its loss per share could be reduced this year. Auxly is not one of the big-ticket companies in the industry and has a market cap of only $281 million at this point.
Auxly stock has fallen over 20% over the past year.
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