Marijuana Stocks Fall As Aphria Earnings Set Tone For Tough Quarter

Aphria stock and other marijuana stocks fell on Monday after the Canadian cannabis producer reported fiscal third-quarter results that missed expectations, as coronavirus-related lockdowns in Canada and abroad hit sales.


The results, some analysts said, set the stage for what could be a tough round of earnings for the cannabis industry in Canada, which is grappling with a spike in cases and new quarantine measures.

Aphria said it lost 15 Canadian cents per share, or 12 cents in U.S. currency. That was steeper than Zacks forecasts for a 3-cent per-share loss.

Revenue of 153.64 million Canadian dollars, or $122.34 million, rose 6% from a year ago. But that was down 4% from the prior quarter, and below expectations for $136.53 million.

“Third-quarter revenues were impacted by lockdowns in the major Canadian provinces, particularly Ontario, which was in a lockdown for nearly the entire quarter, and in Germany,” Aphria said in its earnings release.

Lower Inventory Levels

Canada has been hit with more infectious mutations of the virus and is dealing with a stunted vaccine rollout. Some pot shops in Canada have cut hours or implemented other restrictions. Ontario, Canada’s most populated province, halted private retail for 14 days, Canaccord noted, but then later allowed them to sell pot online.

Along with the coronavirus-related restrictions, Aphria also noted that the provinces that buy cannabis from licensed producers lowered their inventory levels. That led to lower orders, product returns and cut into net cannabis sales. Net cannabis revenue fell 24% from the prior quarter to 51.735 million Canadian.

A bump in alcohol sales from Aphria’s U.S. beer business, SweetWater, helped the top line overall. But it noted “lower on-premise sales compared to the prior year quarter as many food service industry establishments were still operating with limited capacity.”

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Aphria Stock, Marijuana Stocks

Aprhia stock slid 13.5% to 14.06 in the stock market today. Tilray (TLRY), which plans to merge with Aphria, sank 12%.

Among other marijuana stocks, Canopy Growth (CGC) lost 3.5%. Cronos Group (CRON) fell 5.3%. Aurora Cannabis (ACB) gave up 5.7%.

“With renewed COVID lockdown restrictions … we believe the company will be unable to provide any directional commentary to drive confidence,” Stifel marijuana stocks analyst Andrew Carter said in a research note on Monday.

“We expect the shares to trade down today with Aphria’s results setting the tone for what is likely to be a difficult earnings season for the Canadian producers with results illuminating headwinds impacting results,” he continued.


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