Weekly cannabis stock report: HEXO and Organigram shine as Tilray takes a dive

Nothing remarkable happened for shareholders in Canopy Growth, Aurora, Cronos Group, and Aphria.

Canapa Labirint / Unsplash

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An Ottawa-based licensed producer bucked a lacklustre trend this week in Canadian cannabis stocks.

The share price of HEXO Corp. climbed 13.3 percent over five days, buoyed by a quarterly earnings report showing sales were higher than analysts’ forecasts. Net revenue for the three months ending April 30 was up 30 percent over the previous quarter.

On Friday (June 12) HEXO shares closed at US$1.02 on the New York Stock Exchange. Volume was heavy on the final day of the week, with more than 12 million shares traded.

If a share price falls below US$1 on the NYSE for 30 consecutive days, it triggers a delisting process. And HEXO previously failed to reach that threshold in April and May, making this week’s gain especially significant.

In addition to HEXO, another trend buster was Organigram Holdings Inc. Its share price increased nine percent on the week to close at $2.66 in Toronto.

The Moncton-based weed company has endured a rough year, but the investment community responded well to a deal announced on Tuesday (June 9).

Organigram entered a multi-year agreement with Israel-based Canndoc Ltd. to supply dried flower for pharmaceutical-grade cannabis.

“Success in international cannabis markets requires a disciplined assessment of opportunities and the identification of strong, world-class partners,” Organigram CEO Greg Engel said in a company news release.

“For this reason, we are proud to work with Canndoc, a company who we believe shares both our focus on the production of high-quality products and deep commitment to helping patients around the world.”

The Canadian weed company with the largest market capitalization, Canopy Growth Corp. had a fairly moribund week, closing up nine cents to end at $22.44 over the five-day period. It’s now worth $8.3 billion.

CEO David Klein has been on a cost-cutting spree but that hasn’t yet had a measurable impact on the stock. The Smith Falls–based company’s shares are only up 23 cents in Toronto since it reported a $1.3-billion loss on May 29 and Klein announced a “strategy reset”.

But Canopy still managed to avoid the fate of Nanaimo-based Tilray Inc. Its shares dropped 13 percent on the week to close at US$8.42 on NASDAQ.

The stock wasn’t helped by a lawsuit filed against its president CEO, Brendan Kennedy, former chief financial officer Mark Castaneda, and some directors in connection with a January 15, 2019 marketing and revenue-sharing agreement with Authentic Brands Group LLC.

The civil action filed in U.S. District Court in Delaware alleges breach of fiduciary duties, insider trading, and unjust enrichment.

None of the allegations have been proven.

In March, Tilray announced “non-cash charges of $112.1 million related to impairment of the Authentic Brands Group LLC agreement as well as $68.6 million in inventory reserves”.

The lawsuit points out that Kennedy sold nearly US$23 million worth of Tilray shares between January 24, 2019 and February 13, 2020.

Things weren’t nearly as grim for shareholders in another large Canadian licensed producer, Edmonton-based Aurora Cannabis Inc. Its stock fell 2.7 percent on the week to close at $17.91 in Toronto.

That’s still off badly, however, from its post-February high of $24.10 on May 21.

Toronto-based Cronos Group had a rather forgettable week, with its share price declining by 2.5 percent to $8.77 between Monday’s opening and Friday’s close. And Leamington-based Aphria Inc. shares were down two percent on the week, closing at $5.88 in Toronto on Friday.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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