Shares of Aphria Inc. (NYSE: APHA), a rapidly expanding cannabis producer based in Canada, have fallen around 63% since adult-use marijuana sales began in its domestic market, in part because of serious allegations in a short-seller report. The volatile stock dropped 10% during Thursday's trading session as investors waited for a detailed rebuttal to those that never arrived.
Continue Reading Below
Earlier this month, Aphria stock tanked for two straight days after a short-seller accused the company of buying worthless companies owned by management and other insiders at inflated prices. Aphria has a history of buying assets that company insiders own a piece of, so the report received a great deal of attention.
On Dec. 6, 2018, the company appointed a special committee to review its recent LATAM acquisition. Last week, Aphria's CEO, Vic Neufeld, promised a highly detailed rebuttal to the allegations, most likely by Wednesday, which still hasn't appeared.
Investors wondering what could be taking so long will probably pressure the stock further in the near term if the promised rebuttal never appears. I can't remember the last time I've seen a company's newsfeed so heavily clogged with class action lawsuit announcements, and shareholders are going to want answers.
Despite the tumble Aphria stock has taken lately, this company still boasts a big $1.15 billion market cap that is 28.5 times the total sales recorded during the year ended August. If the company can't show us clear signs that its investments are going to generate significant sales growth, the stock will continue tumbling in the quarters ahead.
10 stocks we like better than Aphria Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Aphria Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 14, 2018