Auxly Cannabis (TSXV:XLY) (OTCQB:CBWTF) is a vertically-integrated cannabis company that started life as a consultant and financier of other cannabis businesses. Its shares, CBWTF stock, are currently trading for $0.80 on the CSE.
Over the years, it has diversified and now we are looking at a firm that operates throughout the entire cannabis value chain, both at home and internationally.
CBWTF Stock – Diversification
Because of this diversification, CBWTF stock offers investors a flexible play that doesn’t rely on one area for growth; it has multiple revenue streams keeping it afloat.
Auxly shares were very volatile in the latter half of 2018; whereby prices were doubling or dropping by sizeable amounts without warning.
Now in 2019, that volatility has wained, but prices are low. In fact, they are half of their worth this time last year—this year has, so far, shown CBWTF stock on a steady decline with very few jumps. Already not something investors want to see, this is exacerbated by the fact that most of its peers are moving the opposite way.
Yes, CBWTF stock is less volatile for sure, but it is struggling to grow. The company’s latest Q4 report didn’t help matters.
CBWTF stock immediately dropped almost 12% after the company posted a net loss of $67 million for the year.
A key takeaway from the release was that operating expenses doubled in 2019. It’s going to be a concern for investors that expenses are rising rapidly rising and revenue doesn’t seem to be catching up.
Is There an Opportunity to Buy?
At the end of the day, investors want to know if Auxly’s current position offers an opportunity to buy? Is this an undervalued play?
There is potential so keep your eyes peeled here. Because the company’s state-of-the-art greenhouse facility is expected in 2019 and this should ramp up supply to over 100,000 kg of cannabis by 2020. If Auxly can deliver on this important metric then CBWTF stock may surge in the latter part of the year. Whether it can sustain that growth if it does happen, will be the true measure. But there could be short-term gains on the horizon.
Shares are currently trading at $0.80 by comparison.
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