After suffering a continued bear run which was followed by a successful bull run, Aphria Inc (OTCMKTS:APHQF) seems to be at it again as its share price fell drastically this month. The firm which operates within the healthcare sector with an incline towards the marijuana industry has continued to make major leaps meant to see it grow its share price. Thus far, the firm has grown from trading on the over the counter market to the New York Securities Exchange, mirroring the action of most players in the marijuana market currently. As a result, the firm has continued to spread its wings and flourish.
However, since January, the above-mentioned success had been hampered by the bear run the firm was facing. During this period, the downward turn had negatively affected both the firm’s valuation as well as that of the industry. Back then, most firms faced this. However, their run continued for a while longer as other firms rebounded.
However, towards the end of September, APHQF began rising. Their share price rose from about $7 per share to over $16 per share. The driver during this period was the all-awaited federal legalization of recreational marijuana in Canada. This period also witnessed the highest share turnover the firm had experienced since January.
Readers can review the above price action in the chart below:
However, since mid-October, there seems to have been a correction which affected the company’s share price. As a result, the price has since been dropping drastically. The past two weeks have seen the price of the stock plummet from $16 to their current price of $10.13, a 37% decline in their share price. Moreover, the period has also seen an increase in the number of shares traded.
You may also view this price action in the chart below:
We thus opted to review APHQF as we try to understand the reason behind the declining price and establish what to expect from the stock going forward. This piece provides a synopsis into this.
APHQF: A Review
Aphria Inc is a Canada-based firm which is headquartered in Leamington, Ontario. The firm is a producer and seller of medical cannabis across Canada and has also been working towards boosting their capacity internationally. Currently, they are involved in the production and sale of cannabis oils as well as sativa, hybrid marijuana products, and indica. Their database of patients suffers different chronic conditions for which the firm’s products offer a solution.
The most recent developments pertaining to the firm have been the entry of a new member to their board as well as their entry into a much larger securities exchange. Let us have a look at these in the next section.
The New Star in the Firm
Dubbed the rising star, Dr. Jonathan Simone was the reason behind a stellar performance in the share price of the company on 25th Oct 2018. The doctorate recipient is poised to be a significant factor in the prosperity of APHQF as he leads the research department as a Director of Research and Clinical Studies. He is famed for his role in researching the “role of the endocannabinoid system in neurodevelopment, and in the regulation of affective and cognitive behaviors”.
Aphria Chief Executive Officer, Vic Neufeld applauded Dr. Simone for his work and was quoted stating he expected the firm as well as the new director to benefit greatly from the mutual rapport. He further stated:
“Jonathan is a rising star in the medical cannabis research community and we are pleased to welcome him to the Aphria family.”
Trading on the NYSE
As of 2nd November 2018 Aphria, Inc will begin trading on the New York Securities Exchange. The firm will trade under the ticker symbol “APHA”. The listing follows a series of listings by major cannabis corporations on major securities exchanges in a bid for the firms to raise capital necessary to foster their projected growth – as alluded to, the result of trading on a large securities exchange is the firm’s ability to raise the capital necessary to grow and finance their operations.
In their statement, the firm’s directors expressed jubilance from the move. Mr. Neufeld was quick to note the associated benefit that arose courtesy of them being in one of the largest securities exchanges in the world and the opportunities this presented to them especially due to the exposure to retail and institutional investors. Moreover, the ability to trade alongside other large players in the market plays a major role in solidifying the firm’s brand globally.
He further spoke to the firm’s outlook on internationalization when he stated:
” We are excited to usher in a new era with the recent legalization of adult-use cannabis in Canada and as we aim to further expand our footing in exciting markets such as Latin America, the Caribbean and Europe. Aphria is well-positioned to capitalize on this fast-growing industry.”
While this happens, the firm expects to delist their shares from the OTC markets, a factor which may have sent their investors into panic leading to a sell-off. This is expected to be the reason for their price decline. However, the firm has asked them to check with their brokers as the matter continues to be resolved. The investors’ holdings accounts are expected to reflect their respective investments.
With the above jubilance comes a chance for the firm to execute their strategy. Despite the decline in prices, it is expected that a correction will soon be seen, one which will lead the firm back towards the green zone.
The resulting downturn in the share price of APHQF is only for the short term. When listing, it is usually expected that most firms list at a price higher than their actual value – a premium – thus necessitating a correction. However, the value of the firm is usually seen soon after this and a reversal then happens. As such, we remain bullish about the future price of APHQF.
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Disclosure: We have no position in APHQF and have not been compensated for this article.