NEPT stock is on fire so far in 2019 with a gain of over 110%. In yesterday's session, Neptune Wellness Solutions (TSX:NEPT) (NASDAQ:NEPT) made an all-time stock high.
Completes Funding Worth $41.4 Million
On Thursday, Neptune announced that it had secured as much as $41.4 million in funding through a private placement. The fresh funds will help the company in making a key acquisition and will also help the company in bettering its cash positions, which had depleted to only $9.8 million previously. The company could expand its capacity as a CBD producer considerably once this acquisition is completed.
Cannabis extraction and manufacturing of CBD is a highly important industry now, and in that regard, Neptune Wellness Solutions is certainly one of the better-known companies in this space. Neptune is in the process of acquiring Sugar Leaf, and this cash will go a long way in accomplishing that goal. The entire deal is worth $18 million, out of which $6 million will be in Neptune common stock while the rest of the $12 million will be in cash.
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Additionally, the company is going to seriously increase its extraction capabilities to 1,500 metric tons soon, and that will be a far cry from the company’s current capacity that stands at 200 metric tons. It is hardly surprising that investors are excited; however, it needs to be kept in mind that Neptune is still a relatively new company.
NEPT stock was up over 20% in yesterday's session and made a lifetime high of $6.
The company recorded cannabis extracts sales worth $12,000 in the quarter that ended on March 31. Additionally, it is also looking for an operating license from Health Canada so that it can sell all of its 200 metric tons of extracted product. It is believed that sales would rise drastically once Neptune gets the license, and hence, the planned expansion in capacity seems logical. The extra capacity is not expected to come into effect until 2020, however.
In its latest earnings reports, Neptune reported losses of $12.4 million, and it remains to be seen how far the fresh capital can be stretched by the company.
At the time of writing, NEPT stock is trading higher by another 2% at $5.81.
Featured image: DepositPhotos © SergPoznanskiy
