Aphria Inc (TSX:APHA)(NYSE:APHA) has been plummeting in share price over the past few days as a critical short-seller report has sent investors into a panic. Marijuana stocks have been struggling in recent weeks and Aphria is down even more after a report questioned its expansion and recent investments.
I don’t have an issue with someone calling out a marijuana company for excessive spending, but this is not just Aphria that has done this. We’ve seen countless earnings reports where cannabis companies have been able to grow sales but where costs have outpaced their rate of revenue growth.
Ultimately, there was nothing new that came out this week that made Aphria a much worse investment than it was a week ago, and so the drop in price seems well over done and makes me inclined to think it might be a good time to buy the stock.
The last time that Aphria closed below $6 a share was back in September of 2017. Year to date it has declined by nearly 60% and while it’s an ugly chart to look at, it could present a great buying opportunity for investors that aren’t risk-averse. It’s a big contrarian play that could pay off if the stock is able to mount an even modest recovery.
Aphria is trying to do what it can to assure its investors, including executives buying more shares of the company, but that hasn’t been enough to stop the bleeding just yet.
If we look at sales multiples or price-to-book ratios, Aphria is looking very well in relation to its peers and could be a steal of a deal today.
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