Earlier this week, Rich covered the news that Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) is planning a 12:1 reverse split. While possibly a good move for the company, it may hurt the cannabis space, as it further erodes investor confidence in pot stocks. However, if anything can begin to restore that lost confidence, today’s report from Aphria Inc (TSX:APHA) (NYSE:APHA) might just be it. At the very least, it should provide a nice shot in the arm for Aphria stock.
The Ontario-based global cannabis company just reported its financial results for the third quarter, which ended February 29. These results also include a business update regarding the company’s plans to deal with the ongoing COVID-19 pandemic.
“Is now a time to buy?” Rich asks. “Aphria stock is the lowest it’s been in years. And they just reported record growth and record revenue. So you tell me.”
Aphria’s Strong Q3 Results
For its third-quarter, Aphria’s gross revenue for adult-use cannabis was $44.7 million, an increase of 54% from the previous quarter. Its net cannabis revenue grew 65% to reach $55.6 million, and its net revenue was $144.4 million, up 20% from Q2. From the same period last year, net revenue is up 96%.
The company’s Adjusted EBITDA from cannabis operations came to $6 million in Q3, an increase of 78% from the prior quarter. This marks Aphria’s fourth consecutive quarter of positive Adjusted EBITDA.
Aphria also ended the quarter with a strong balance sheet and liquidity, including $515.1 million of cash and cash equivalents. These funds will go towards the company’s planned Canadian and international growth.
Discussing the company’s position and how it might affect Aphria stock, CEO Irwin D. Simon stated:
“As we face uncertain times, I am proud of how the Aphria team has come together to navigate these uncharted waters. Going forward, we believe Aphria continues to be differentiated in the cannabis industry through our brands, cultivation expertise, high quality standards, cash position and balance sheet. We continue to focus on the highest return opportunities for growth and long-term value creation.”
Simon adds that Aphria’s facilities remain open and operational as the company takes every caution to protect its employees from COVID-19.
How Has Aphria Stock Responded?
APHA shares shot up 16%, from $5.09 to $5.93, immediately after the Q3 results were published. Since then, the stock has largely returned to its previous price, though it shows signs of picking up again.
The share price is still down 23.35% from the start of the year, however. Currently trading at $4.99, Aphria’s very near its lowest share price in almost three years.
How is the stock so low when the company is performing so well? Rich explains:
“We’re in very unprecedented times in the stock market. I believe a lot of people are just trying to get their money out of the market. So when they see a little good news like this, they cash out of Aphria stocks and walk away with their money.”
What does that mean for the rest of us? Well, anyone who wants to keep investing in cannabis stocks can take advantage of extremely low prices. And seeing as Aphria is repeatedly proving its profitability, this is one stock that cannabis investors should definitely consider.
Featured image: Canva