CBWTF stock is gaining momentum this morning after Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF) reported second-quarter earnings.
The cannabis boom of 2018 propelled many companies into the limelight, and even the smaller operators managed to grow during that period. One of those is Auxly Cannabis Group, which has managed to gain some attention among investors despite only being a penny stock.
The company posted its Q2 2019 financial results today, and during that period, the company managed to generate $2.31 million in revenues. On the other hand, the net losses for Q2 2019 stood at $14.19 million. Research contracts and other items accounted for the bulk of the revenues with a total of $2.31 million, while cannabis sales only generated $0.44 million in revenues.
These numbers are underwhelming considering the fact that the company has been able to attract hundreds of millions in investments, and investors must be wondering what the Auxly management has been up to all this time. The costs for the second quarter stood at $16.15 million, out of which administrative and general costs made up as much as $11.32 million.
CBWTF stock is up 3% and now trading at $0.694. On the Canadian side, Auxly stock is up 2.92% at $0.928.
The company stated that the underwhelming cannabis sales during the quarter were due to its decision to hold back some of the products in order to manufacture cannabis-derived products.
The derivative products are going to be made legal in Canada in December, and the company is apparently biding its time before that happens. Derivative products like extracts and edibles, among others, are going to be legally sold by the end of the year in Canada (so long as everything goes according to plan) and many companies are going to get into the market in a big way.
Auxly’s decision to hold back some of its products could see it getting into that particular market with ease. In addition to that, it is also important to note that those particular products also generate higher margins, and hence, maybe the company is onto something.
CBWTF stock has outperformed the broader cannabis sector over the past month, with a gain of over 30%.
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