CBWTF Stock: Weak Quarterly Results Put on Pressure

CBWTF stock

CBWTF stock has been under pressure recently following Auxly Cannabis Group’s (TSXV:XLY) (OTCQX:CBWTF) fourth-quarter results. CBWTF stock has corrected over 20% in the past week from a high of $0.76 USD.

The drop in stock price is due to the released Q42018 and FY2018 earnings, which reported that Auxly Cannabis Group’s loss widened significantly compared to 2017.

Earnings Review

Despite reporting lower than estimated earnings for FY2018, Auxly Cannabis took a step closer to enhancing its revenue by diversifying its operations through streaming deals and acquisitions.

Auxly reported $747,000 CAD in revenue in FY2018, mostly from research contracts. Despite research revenue dropping in Q42018 the company expects revenue recognition to pick up this year as Auxly’s streaming partners plan to take cannabis production online.

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So where does this leave CBWTF stock? It could go in either direction at this point.

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In Q42018, Auxly spent a lot on preparing for the cultivation and production of cannabis products such as oils. The greatest milestone for the company was its 80% acquisition of Inverell S.A in November. The deal was estimated to be worth $15 million in cash and will give Auxly access to over 150 hectares of Inverell’s hemp crop.

CBWTF Stock: Expected Milestones

Although Auxly’s loss widened in FY2018, company CEO Chuck Rifici stated that the company had made progress positioning itself as a leader in the cannabis industry. He added that the company has been successful in the diversification of its product pipeline through the R&D of derivative products.

In 2019 the company will commence selling raw cannabis in the dry marijuana market, focusing on maximizing the potential of derivative products. This is because derivative products have better margins compared to the dried cannabis flower. Auxly Cannabis wants to complete its R&D at the Dossecann facility and will also be focusing on completing construction of its Sunens Farms greenhouse.

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