Auxly stock has tanked by as much as 25% over the past month, which could be explained by a certain level of volatility that has emerged in the cannabis space over the past few weeks. From layoffs to executive change-ups, is Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF) feeling any of the burn like the rest of the market is feeling?
In January, Auxly Cannabis Group was added to the S&P/TSX Cannabis Index. The index in question includes a handful of stocks that trade on the TSX Venture Exchange and the TSX.
This was a significant development for Auxly stock, considering each stock is chosen carefully by the TSX Market Intelligence Group.
In November, the company declared its financial results for the third quarter of 2019, and despite beating analysts’ estimates; Auxly stock fell that day. Revenue rose by 97.68% to C$1.62 million year-on-year, but it reflected a sequential fall of as much as 41.45%.
The sequential drop in revenue may have been one of the major factors behind the fall in Auxly stock at the time.
However, Auxly Cannabis Group considers itself to be a global cannabis company that is focused on wellness products, medical cannabis, and recreational cannabis. This means that it has a large addressable market; with studies suggesting that the Canadian market alone could be worth as much as $11 billion by 2025, any additional market space Auxly can snap up is just the icing on the cake.
On top of all of that, the company is looking to enter the newly legalized cannabis derivatives market in Canada. It has made several important partnerships to do this. One example is its joint venture with Sunens, which will see the two companies build a 1.4 million square foot greenhouse and work with the hemp farmers from Prince Edward Island. This greenhouse could be operational by Q2 2020.
Auxly Cannabis Group has also attracted a massive $123 million investment from the UK-based tobacco company Imperial Brands (OTCQX:IMBBF), which will give Auxly access to Imperial's vaping technology.
Auxly stock is currently down by 1% at C$0.545.
Featured image: Canva