Aphria’s Smoking Victory Blunts

Aphria CEO Irwin Simon is seeing green as Democrat Joe Biden prepares to be sworn in as president of the United States next week.

The U.S.-listed shares of Aphria [$APHA] surged 17% in midday trading Thursday touching 2019 highs, after the Canada-based cannabis company unveiled a surprise fiscal Q2 adjusted profit and revenue that jumped above forecasts, citing strength in its global cannabis and consumer packaged goods businesses. The net loss for the quarter to November 30 grew to C$122.0 million ($96.3 million), or 42 cents a share, from C$8.2 million, or 3 cents a share, during the same period in 2020. 

Barring non-recurring items, the company notched an EPS of 1 cent from a loss of 19 cents, beating the FactSet consensus for a per-share loss of 3 cents. Revenue elevated 33% to C$160.5 million ($126.6 million), above the FactSet consensus of C$153.9 million.

Following Aphria’s “reverse acquisition” of Tilray in an all-stock transaction, it will become the largest marijuana company in the world on a pro forma revenue basis, expected to generate $685 million in sales annually.

Adult-use cannabis revenue grew 149% to C$72.1 million. The average selling price of adult-use cannabis boosted to C$4.29 per gram from C$4.15 per gram in the previous quarter, while the average retail selling price of medical cannabis fell to C$6.96 per gram from C$7.38 per gram. 

Shares of Tilray [$TLRY] shot up 19.4%, as the company and Aphria agreed in December to a merger. The stock, which which is on track for the highest close since November 2018, has soared 98.6% over the past three months while the Alternative Harvest ETF [$MJ] has appreciated 72.4% and the S&P 500 [$SPY] has tacked on a 9.4% gain.


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