The Midas Letter highlighted earlier this month that Aphria delayed their fourth quarter earnings release to August 1st—which just happened to coincide with Molson Coors Bewing Co. Q2 earnings results. While we believe the move is probably a coincidental maneuver to harmonize a beginning-of-the-month reporting cycle, it’s also an action Aphria would take if they were getting into bed with a company like Molson Coors. After all, both companies would be reporting certain coincidental operating results and balance sheet line items at that point.
Aphria CEO Vic Neufeld (10:00): “So we have a series of brand activation tactics and activities all lined up. I refer to it as the ‘dominoes are ready to fall’… It’s a matter of when different organizations view the timeliness of this activation, so we’re still waiting…”
I believe the current run reflects some latent optimism that either/or post-earnings conference calls might reveal some nugget of future cooperation between both companies.
Outside of that Hail Mary, the run is likely pricing-in anticipation of more solid operating results. Although most cannabis earnings to date have not moved the needle, there have been exceptions.
This morning, OrganiGram Holdings Inc. spiked almost nine percent, trough-to-peak, after record Q3 financial results which included huge percentage increases in three & nine months net sales, and “all-in” cultivation costs of $0.80 per gram.
Should Aphria “wow” the market with similar such operating results, there could be room for similar upside extension. Keep in mind however, that OrganiGram was trading near 3-month low at the time of today’s announcement, and it currently trading below the opening gap low of the day.
That’s exactly the type of sell-the-news event Aphria wishes to avoid this time around.
Final Thoughts
As I write this article, Aphria has just gone negative on the day—now off about ↓4.50% from today’s intraday high. This would be consistent with OrganiGram’s performance following today’s post-earnings gap-up, while demonstrating selling-the-news is still in vogue. Under such bear market pretexts, the company will have its work cut out for it unless it can “wow” the market in some yet undetermined way.