Aphria: Should Cannabis Investors ‘Buy the Dip’?

Aphria (APHA) reported its latest financial results before the market opened on October 15th and they came below analyst expectations. The market did not respond kindly, and…

the stock is down -22.6% since October 14th.

The company posted $145.7 million in net sales for the first quarter of 2021, which came in four percent lower than the previous quarter. Analysts were expecting revenue of $159.6 million.

Management stated that the COVID-19 pandemic had a significant impact on its medical cannabis sales in the international markets such as Germany, which offset substantial increases in overall cannabis revenues. The company also said that fewer in-person visits to physicians along with people being less inclined to go outside contributed substantially to the drop in revenues.

But, despite the weak sales figure, APHA did post a narrower-than-expected net loss of $5.1 million, or $0.02 per share, and adjusted earnings before interest, taxes, depreciation, and amortization of $10.0 million. This marks the sixth consecutive quarter of positive EBITDA. Another positive trend that continued was APHA’s net cannabis revenues. The company posted $62.5 million in the first quarter up from $53.1 in the quarter before.

Another important figure that I believe was overlooked was the fact that APHA continues to reduce production costs.  The company’s cash cost per gram of dried cannabis dropped for the fourth consecutive quarter to just $0.87. As costs continue to decrease, this could…

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