Aphria Inc (TSE:APHA) CannaBev Comments Fail To Inspire Stock Price

Benjamin A. Smith
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Yesterday, Aphria Inc (TSE:APHA) (NYSE:APHA) (FRA:10E) proved that the boy who cried wolf syndrome is officially in effect in regards to unspecified mainstream cannabev talk. It’s been an amazing turnaround for the narrative, which, on several occasions, delivered an immediate material boost in share price to multiple Canadian LPs.

Naturally, Aphria was in middle of it all. Company CEO, Vic Neufeld, appeared on the BNN Bloomberg set to talk about the proposed acquisition of CC Pharma GmbH, among other topics. The conversation eventually drifted towards rumored beverage partners, to which Aphria has been inextricably linked. Here are some of the more poignant quotes derived from that conversation:

“When Aphria makes the ultimate decision to get into bed with a strategic partner… We are very desirous, if I could say that. We’ve had conversations with many entities and beverage is part of it.”

While none of Mr. Neufeld’s statements broke new ground, the market reaction was muted nonetheless. It appears that, absence of substantive and specific details relating to potential partnerships with global CPGs, the half-life on any such talk is now measured in minutes rather than hours. A brief $0.30 move on increased volume withered on the vine quickly, succumbing to the droning selling action dogging the rest of the sector.

Furthermore, overall volume chimed-in at a lackluster 4.924 million shares, which was the lowest total on the Canadian side since August 22nd. While yesterday’s low volume selloff was completely normal and healthy, it also indicates that the market’s interest in beverage partnership talk is beyond waning. It needs more than jawboning and non-specifics to move the needle, as the cannabev narrative has overplayed its hand.

Perhaps dampening the effect was recent news that Coca-Cola Co. declined to pursue plans to develop cannabis-infused beverages. Only weeks earlier—September 17th to be specific—Aurora Cannabis jumped ↑16.86% on reports that Coca-Cola was in talks with Aurora to develop cannabis drinks. Turns out it wasn’t true, and perhaps market participants have a much more discerning eye about buying-in indiscriminately to similar glorification today.

None of this is to say that major cannabev deals aren’t in the pipeline. But the days of generalized soundbites moving stocks double-digits on vague innuendo appear to be over. Similar statements  delivered this past summer or early fall would have produced a more pronounced effect. The market now craves partnership specifics, or that shot-in-the-bow deal which takes everyone by surprise.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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