Selling for $0.56 USD at present, CBWTF stock is at a low point. As one of the most polarizing brands within the cannabis industry, Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF) comes with stark positives and stark negatives. So let's look at some of the reasons why analysts like Auxly stock, versus some of the reasons why analysts say wait.
CBWTF Stock: Why Auxly is Bad
Okay, Auxly had a rough 2018. According to the Motley Fool, it lost more than half its value in 2018, making it "one of the 10 worst-performing marijuana stocks of the year." To make matters worse, 2019 hasn't fared much better, with CBWTF stock down close to 20%. This won't exactly give investors a boatload of confidence.
The reason for such value-loss is (partly) that the company has yet to make any profits. In Q3 2018, Auxly Cannabis Group showed losses totaling nearly $4.6 million CAD. This won't give much confidence either, considering Q3 is also when many of its peers gained profits off of the Canadian recreational market kicking off.
As a cannabis financing partner, the nature of its business is to spend a lot of money. When you've yet to make a profit back, this becomes a real problem. Many of its upstream partners are still only at the producing stage/expanding stage. This effectively means that Auxly hasn't sold nearly enough cannabis yet to deliver profits and CBWTF stock showcases this. It will take a lot more time before Auxly knows if its financial backing has paid off.
Overall, this highlights how dependent Auxly is on the success and business of its parties. That is always a tough one for investors to stomach—it's hard to trust something that is not entirely self-sufficient.
>> Terra Tech: Another 11% Jump Despite Tepid Q4 Earnings Report
CBWTF Stock: Why Auxly is Good
One major reason why Auxly Cannabis Group is good is that it is one of a few companies that have complete diversity across the entire cannabis supply chain. With its plethora of streaming deals, it is a player in "upstream cultivation, midstream extraction and processing, and downstream distribution and sales segments of the cannabis industry." This business model gives it multiple revenue streams, meaning there's no core reliance on one area for success.
Auxly is expecting its annual cannabis capacity from its fleet of streaming partners to hit 170,000 kilograms by 2021. If it hits this level, Auxly will firmly place as a top-ten cannabis producer in terms of capacity and output.
Further, let's consider its role in what is estimated to be a $100 billion USD market within the next decade. With all those pies it has its fingers in, Auxly will, potentially, deliver healthy profits to investors down-the-line. With the industry so lucrative, Auxly may be very successful even if it remains a mid-tiered company.
Of course, "down-the-line" is something to note here, because this is a case of waiting and watching CBWTF stock. The potential with Auxly is huge; it just may not show itself for quite some time.
But what do you think? Are you an Auxly Cannabis fan?
Featured Image: Canva
