Cannabis producer Aphria fights back against short seller — but it’s not enough to stop the stock slide

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Rations in Canadian cannabis company Aphria Inc. plunged for the second day in a row on Tuesday as the circle fought back against allegations from a short seller that its just out slew of overseas takeovers are worthless and designed only to enrich circle insiders.

The company’s shares on the TSX closed down 27 per cent on Monday when flagrant short seller Gabriel Grego of Quintessential Capital Management whooped the Leamington, Ontario-based marijuana firm “a shell game with a cannabis province on the side.”

(Short sellers make money when stocks in the retinues they target go down, because they borrow other shareholders’ rations in those companies, sell them at the current price and then bank on being capable to replace the shares they’ve borrowed for a lower price later on.)

Grego minute visits to many of the company’s recently acquired facilities — Jamaica-based Marigold, an Argentinian pharmaceutical concern called ABP and Colombian producer Colcanna  — and portrayed them as decaying, and worth nowhere near the $736 million price tag that Aphria take-home pay to acquire them.

On Monday, the company came out with a detailed response to his claims, outlining the various production facilities, licences and other on the tables that the acquired companies have at their disposal as a result of heterogeneous recent deals.

Aphria also noted that it received pecuniary advice, and a fairness opinion on the value of the properties it had acquired, from Cormark Guardings Inc., which concluded the transactions were “fair, from a financial show of view, to Aphria.”

As a vote of confidence in the company, CEO Vic Neufeld and other associates of the executive team bought $3.1 million of the company’s shares on admitted markets on Monday. “It is the commitment of our incredible team and partners that
has break out us to where we are today, making Aphria a global cannabis success article,” Neufeld said.

Venture capitalist Andy DeFrancesco, who features prominently in the deficient rare seller’s report because he was an adviser to Aphria on the purchase of the assets at the mid-point of the storm, came out swinging on social media on Monday, accusing the concise seller of misleading investors to make money for himself.

He also posted videos of his own place visits to one of the Jamaican facilities in question, showing what appears to be rackets of cannabis plants growing in fields.

Later on Tuesday, the succinct sellers responded to Aphria’s rebuttal, arguing that it “conveniently [dodges] addressing almost all of our very serious core allegations.”

“After a precise review of Aphria’s latest press release, we feel even more convinced in our thesis,” Quintessential said.

Tuesday’s developments did little to assuage investors’ quake ats, as the stock continued its slide. After closing at $7.60 per share on Monday, Aphria was off another 13 per cent, to $6.55, most recent in the day. Earlier it hit a new 14-month low of $5.83 per share.

Chris Damas, editor of the cannabis swear ining newsletter the BCMI Cannabis Report, says he expects the volatility to carry on with for a while yet until the truth of the matter is revealed.

“I see Aphria doing a vault trade here on the uncertainty surrounding the above drama, and bottom consumers and short covering should boost the shares from these levels in the shy of term,” he said.

“But this is a trade for experienced day traders and risk takers only.”

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