Aphria sinks 14% after earnings and revenue fall short of estimates in fiscal third-quarter results

  • Aphria stock fell as much as 14% on Monday after reporting sales and operating income that missed analyst forecasts.
  • The Canadian cannabis producer turned in revenue of $153.6 million and a $361 million net loss.
  • CEO Irwin Simon said, “The duration and impact of lockdowns…were greater than we initially anticipated.”
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Canadian cannabis producer Aphria saw its stock fall as much as 14% on Monday after the company turned in a disappointing fiscal third-quarter earnings report.

Aphria said it generated revenue of $153.6 million in the quarter compared to analysts’ consensus expectations for $163.3 million. Revenue was up 6.4% year-over-year, but sequentially it fell 4.3%.

Adjusted EBITDA came in at $12.7 million in the fiscal third quarter, which was below analyst consensus estimates for $14.9 million.

Aphria also turned in a record net loss of $361.0 million, or $1.14 per share, in the fiscal third quarter. The loss was partly due to increasing production costs at the firm.

The cash cost to produce dried cannabis per gram rose 13.9% quarter-over-quarter in Aphria’s quarterly report and adjusted cannabis gross margin sank to 39.2% vs. 45.9% in the prior quarter.

The Leamington, Canada-based company saw its cannabis sales fall to 18,695 kgs in the fiscal third quarter as well, a decrease of 30.1% compared to the fiscal second quarter.

The company’s CEO Irwin Simon pointed to the impact of lockdowns as his reasoning for the disappointing results.

“The duration and impact of lockdowns across many of the regions we operate in, particularly in Canada, were greater than we initially anticipated for the cannabis industry and our business; however, we believe Aphria remains well-positioned with our leading brands and market share to experience a robust increase in our top-line as the market improves.” the chief executive officer wrote in a press release.

One bright spot in the fiscal third-quarter report came from SweetWater, a cannabis brewing company Aphria acquired for $300 million in 2020. SweetWater saw sales climb from $0.9 million last quarter to nearly $15 million.

Aphria is set to merge with fellow cannabis producer Tilray to make the largest cannabis company in the world in terms of revenue pending shareholder approval on Wednesday.

The combined company has plans to continue its international expansion as the regulatory environment for cannabis producers and retailers continues to improve.

Aphria traded down 11.80% as of 10:07 a.m. ET on Monday.

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Cannabis stocks surge after Governor Andrew Cuomo says New York is ‘very close’ on legalization

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Employees tend to medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel.

  • Cannabis stocks leaped higher on Monday after Governor Andrew Cuomo said New York is “very close” on legalization.
  • The comments came at a Monday afternoon news conference, in which Cuomo added that “we have to get it done this year.”
  • Shares of several marijuana sector ETFs surged as much as 4% in Monday trades.
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Cannabis stocks moved higher on Monday after Governor Andrew Cuomo said New York is “very close” on legalizing the drug for recreational use.

Shares of Tilray and Aphria traded up as much as 14% and 12%, respectively, while marijuana ETFs like the ETFMG Alternative Harvest and AdvisorShares Pure Cannabis ETFs were up as much as 4%.

“I think this [cannabis legalization] should’ve been passed years ago,” Cuomo said in an afternoon news conference, before adding “we have to get it done.”

“I think too many people have been imprisoned, incarcerated, and punished. Too many of those people are Black, Latino, and poor. It’s exaggerated the injustice of the justice system,” Cuomo added.

Like many other states that have considered the benefits of marijuana legalization, Cuomo said the measure could help raise revenue for the state’s deficit, which surged amid the COVID-19 pandemic.

But one analyst from BTIG thinks Cuomo is pushing hard for marijuana legalization to distract from recent sexual harassment allegations made against him. BTIG thinks a vote on the measure could come before the April 1 due date for the state’s budget.

If New York does legalize cannabis, it would likely represent a seminal moment in the cannabis reform and investment movement, as the fourth most populous state would grant its residents permission to consume the drug legally.

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The first US cannabis ETF surpassed $1 billion in AUM in its first 6 months of trading

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Cannabis plants are pruned at a grow facility in Oregon

The AdvisorShares Pure US Cannabis ETF has surpassed $1 billion in assets under management, according to a company statement released Tuesday.

The ETF, which trades under the ticker MSOS, launched on September 2, 2020 and has grown from $2.5 million in assets to now $1 billion in just six months. The fund has returned 110% since its inception and 37% in 2021 alone.

The AdvisorShares ETF was the first US exchange traded fund to focus solely on American cannabis companies and multi-state operations (MSOs), or companies directly involved in the legal production and distribution of cannabis. 

The fund’s inflows are a sign of growing investor interest in the cannabis space amid speculation that the Biden administration will keep its campaign promises and decriminalize marijuana. Some Democrats in Congress have pushed even further, advocating for the full legalization of cannabis in the US. 

“There’s a lot of excitement surrounding the cannabis investment space right now and for a variety of reasons,” said Dan Ahrens, AdvisorShares’ chief operating officer and portfolio manager of MSOS. “We firmly believe that the U.S. cannabis market provides a compelling long-term investment opportunity that clearly differentiates itself from other areas of the globe.” 

Other cannabis ETFs have also  performed well in 2021. Even after shedding gains from earlier this month, the ETFMG Alternative Harvest ETF is up 63% year-to-date, while the Amplify Seymour Cannabis ETF is up 81% year-to-date.

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