10 Sep

Cannabis Roundup: ACB, TLRY, CRON, and OGI

WRITTEN BY Rajiv Nanjapla

Today, the broader equity market looked subdued. At 1:47 PM EDT, the S&P 500 Index and the Dow Jones Industrial Average were down by 0.3% and 0.1%, respectively.

However, the cannabis ETFs—the ETFMG Alternative Harvest ETF (MJ) and the Horizons Marijuana Life Sciences Index ETF (HMMJ)—were up by 1.5% and 1.2%, respectively. Also, the majority of the cannabis stocks were trading in the green.

Tilray up by 3.2%

Yesterday, Tilray (TLRY) signed a definitive agreement with its largest shareholder, Privateer Holdings, to extend the lockup period by two years. Under the agreement, the company would issue 75 million Tilray shares to Privateer’s equity holders, while canceling its current holding of 75 million shares.

The announcement appears to have led Tilray’s stock to rise today. At 2:00 PM EDT, the company was trading up 3.2%. Year-to-date, the company has lost 57.3% of its stock value through September 9.

In its second-quarter earnings, Tilray outperformed its revenue estimates. However, its adjusted loss per share was higher than expected, leading to a fall in its stock price.

Aurora Cannabis closes previously announced credit facilities

Yesterday, Aurora Cannabis (ACB) closed the previously announced expansion of its credit facility. On August 15, the company announced that it would expand its secured credit facility from 200 million Canadian dollars to 360 million Canadian dollars.

The company had recently sold its stake in The Green Organic Dutchman Holdings (TGOD) for 86.5 million Canadian dollars. Aurora gained an internal rate of return of 50% from that transaction.

Aurora, which is scheduled to report its fourth-quarter earnings on September 12, was trading up 3.1%. For our earnings preview, please read Aurora Cannabis: What to Expect from Its Q4 Results. Year-to-date, the company has returned 16.7%.

Cronos Group up by 3.7%

The strength in the cannabis sector appears to have rubbed off on Cronos Group’s (CRON) stock price. The company was trading 3.7% higher at 1:47 PM EDT today.

Last month, Cronos Group reported its second-quarter earnings. During the quarter, the company had outperformed analysts’ revenue estimates. However, its operating losses widened.

The company’s management expected its operating losses to increase in its second half, which led to a fall in the company’s stock price. Year-to-date, the company has returned 8.9% through September 9.

Organigram Holdings

Organigram Holdings (OGI) announced that it had received approval from Health Canada for 17 additional cultivation rooms at its Moncton facility. The company expects the new licenses to increase its production capacity by 15,000 kilograms per year.

The license is effective from September 6, 2019, to March 27, 2020. Organigram Holdings traded 1.2% higher today. Year-to-date, the company has lost 2.7%.

Organigram Holdings reported its third-quarter earnings on July 15. Its revenue had declined compared to its second-quarter revenue. Also, the company’s gross margin and EBITDA margin were lower than in the second quarter, which led to a fall in its stock price.

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