Aleafia Health Inc (OTCMKTS: ALEAF) is back to where it started the year at, after succumbing to short selling pressure in recent weeks. Price action indicates the stock is staring a critical support level, a breach of which could result in further losses.
Aleafia Health Price Analysis
A 40% plus plunge from this year highs comes as a surprise given that the company has made significant progress in positioning itself to become an industry leader. In the recent past, it has confirmed the build-out of a 60,000 kg outdoor grow site poised to strengthen cannabis cultivation and production capacity.
The company is also on course to add 50,000 kg of extraction capacity following Phase II expansion of its processing facility in Paris Ontario. With the expansion, the company will boast of a robust extraction and cultivation footprint across three facilities.
In addition to ramping up cannabis cultivation and production in Canada, the company is also in the process of expanding its toes into Australia’s burgeoning cannabis market. Aleafia Health has completed a strategic investment in CannaPacific, which is fresh from acquiring a 108,000 sq. Ft. greenhouse facility in New South Wales Australia.
Amidst the flurry of positive developments, underscoring long-term prospects, Aleafia Health has continued to edge lower in the market. The stock is currently staring at the $1 a share support level, above which it remains well supported for further upside action.
Conversely, a breach of the support level would leave the stock susceptible to further drops in continuation of the bearish trend that began late last year. A bounce back from the $1 support level should result in the stock trading sideways on its way to this year higher highs.
About Aleafia Health
Aleafia Health Is an integrated cannabis health and wellness company. The company produces and distributes cannabis-infused products including oils capsules and sprays. The company also boasts of a network of 25 medical cannabis clinics used to sell some of the products.
Expanding Production Capacity
Amidst the underperformance in the stock market, Aleafia Health has continued to strengthen its cannabis production capacity. The company has completed the build-out of its 60,000kg Aleafia Campus outdoor grow facility.
In addition, the company is in the process of expanding three other Aleafia Health production facilities that would take production capacity to 138,000 kg of dried flower, supported by a 50,000kg extraction capacity.
The build-out of three production facilities and the signing of supply agreements means the company is on course to scale its cannabis health and wellness vision, globally.
“It’s exciting to see first-hand the result of months of planning followed by an intensive few weeks of construction, all culminating in the completion of Aleafia Health’s 26-acre outdoor cultivation site. “Successful outdoor growing at scale will position the Companies’ with first-mover advantage as low-cost production leaders,” said Aleafia Health Chairman Julian Fantino.
According to the Chief Executive Officer, Geoffrey Benic, milestones achieved last year position the company to scale processing and distribution of high margin, value-added cannabis health and wellness products.
Plans are underway to leverage a global distribution platform and data-driven production expertise to increase cannabis supply and extraction capacity. Increased production capacity should help Aleafia Health accelerate revenue growth. For the full year ended December 31, 2018, Aleafia Health generated revenues of $3.3 million compared to nil$ for 2017.
Buoyed by revenue growth, Aleafia is in the process of expanding its footprint into the recreational cannabis marketplace as it looks to strengthen its revenue base. The company has since launched, Symbol Atmosphere, its first adult-use oral metered-dose cannabis spray.
The launch affirms the company’s health & wellness adult-use product strategy that seeks to build a diverse portfolio of medical cannabis products. The BC Liquor Distribution has already placed the first order of the new product.
“The Symbol Atmosphere brand and format extension for the adult-use consumer reinforces Aleafia Health’s commitment to delivering unique products to health & wellness-conscious consumers, whether they are medical patients or purchasing OTC,” explained Mr. Benic.
What Next For Aleafia Health
While Alexia Health is trending lower after a solid start to the year, one cannot dispute its growth prospects in the cannabis sector. Revenue growth in 2018 underscores price action that should gather pace as the company continues to strengthen its cannabis cultivation and production capacity.
The stock finding support above the $1 mark should make it an ideal bounce back given the company’s tremendous potential in the burgeoning sector.
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Disclosure: We have no position in ALEAF and have not been compensated for this article.