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There's more to the story for these Canadian marijuana stocks' gains -- or lack thereof -- in 2018.
Which stock wins in a matchup between a big marijuana producer and a top ancillary products supplier to the cannabis industry?
When Canada legalized recreational marijuana in October, it emerged as the world leader in the industry — and U.S. companies are scrambling to get in on the action. Uruguay may have been the first country to legalize pot, but the South American country's market is dwarfed by Canada's. And while a majority of U.S. states have legalized marijuana to varying degrees, contradictory federal laws have U.S. companies reluctant to invest here. — Marlboro maker Altria Group Inc., which is headquartered in Richmond, Virginia, is paying $1.8 billion for a 45 percent stake in Cronos Group.
On its third-quarter earnings conference call, AbbVie (ABBV) raised its adjusted EPS guidance for 2018 from its previous projection of $7.76–$7.86 to $7.90–$7.92. The revised estimate implies a YoY (year-over-year) rise of 41.3% considering the midpoint of the guidance range. As per the company’s third-quarter earnings conference call, AbbVie expects its adjusted fourth-quarter EPS to be in the range of $1.89–$1.91 excluding a $0.26 impact of noncash amortization and other items.
Today, Aphria (APHA)(APHQF) resumed a sharp sell-off in its stock from early this month after surging a whopping 51% yesterday. Now, let’s find out what could be driving Aphria stock down today. Grego alleged that “Aphria had diverted funds into inflated investments held by insiders.” Since then, these allegations have taken a massive toll on investors’ confidence.
On its third-quarter earnings conference call, AbbVie (ABBV) raised its net revenue guidance for 2018 from its previous projection of $32.5 billion to $32.7 billion. The company also raised its forecast for YoY (year-over-year) operational revenue growth in 2018 from 14.5% to 15.0%. As per AbbVie’s third-quarter earnings conference call, the company expects a favorable revenue impact of less than 1% due to foreign currency fluctuations in 2018.
One of the world's biggest tobacco companies is diving into the cannabis market with a $1.8 billion buy-in. Marlboro maker Altria Group Inc. is taking a 45 percent stake in Cronos Group, the Canadian medical and recreational marijuana provider said Friday. The agreement includes a warrant to acquire additional shares over the next four years that could give the Altria, which is based in Richmond, Virginia, a 55 percent ownership stake in the Toronto company.
The company saw a rise of 17.53% in its share price from $80.21 on November 1 to $94.27 on November 30. Thereafter, AbbVie saw a 3.95% fall in its share price from November 30 to December 5. On November 30, AbbVie issued a press release announcing agreements that granted Pfizer (PFE) a nonexclusive global license related to Humira’s intellectual property.
On December 6, Aphria’s (APHQF) short seller, Hindenburg Research, released its Part 2 on what it found to be further malice in the company’s acquisition efforts. According to the research, this acquisition showed a 5 million Canadian dollar gain to Aphria’s insider in a matter of six days. Further, the report pointed out that Aphria’s CEO, Vic Neufeld, was also a part of the “discount round” in which Aphria purchased companies at overpriced valuations. Even more damning was the short seller’s observation that the SEC had alleged that the individuals that Aphria purchased companies from were involved in pump and dump schemes.
Aprhia (APHQF) recovered by nearly 50% on December 6 due to its further commitment to relieve investors’ fears related to its Latin America business. The company appointed a special committee that consists of independent directors who will be tasked with reviewing the legitimacy of the company’s acquisitions in Latin America. The above chart shows that Aphria (APHQF) is among the top ten holdings in the Horizons Marijuana Life Sciences ETF (HMMJ).
On December 7, Altria officially announced that it acquired a ~45% stake in the company to the tune of $1.8 billion. Given that Altria has been in the tobacco business for nearly three decades, the cannabis business makes sense for the business.