Aphria Inc.’s stock price has been cut in half since the beginning of the week, with a short-seller doubling down on his allegations and the pot firm receiving its first downgrade from the Street Wednesday.
The rout followed Quintessential Capital’s short analysis at the Kase Learning Shorting conference Monday morning. Gabriel Grego, founder of Quintessential, told BNN Bloomberg television that he expects the stock to go to zero.
Meanwhile, Eight Capital’s Graeme Kreindler cited uncertainty around the company following Monday’s allegations for his downgrade to neutral from buy. He cut his price target 68 percent to C$7 per share from C$22 per share.
Aphra’s management team needs to make “significant strides” to rebuild trust and investor confidence in the market, Kreindler writes in a research note. He remains uncertain with respect to future legal and regulatory issues.
The potential for Aphria to partner or be acquired by big players in the alcohol, tobacco or pharmaceuticals industries has likely decreased “significantly” in the short term following the release of the short report, Kreindler wrote, while potential partners will likely look elsewhere in the cannabis universe. On Monday, marijuana producer Cronos Group Inc. confirmed it’s in talks about a potential investment from Altria Group Inc.
Eight Capital’s downgrade follows GMP Securities analyst Martin Landry removing his price target and putting his rating under review Tuesday.
Credit: bloomberg.com
