Aphria Inc (NYSE: APHA) is having yet another strong day in the market today after seeing gains of more than 20% by the closing bell yesterday. The gains come after the company responded to yet another short report. Nonetheless, the rebuttal to the report led to excitement among investors, sending the stock on a run for the top. Today, we’ll talk about:
- The news;
- what we’re seeing from APHA stock as a result; and
- what we’ll be watching for ahead.
Here’s Why APHA Is Up
As mentioned above, Aphira is having yet another strong day in the market today after the gains that we saw on the stock yesterday. So, what’s going on? Well, it has to do with a press battle between the company and a short report writer.
Recently, Hindenburg Research issued yet another short report on the company. This report followed the firm’s first batch of short reports, calling APHA a shell game with a cannabis business on the side. The first report also called the value of a number of the company’s acquisitions into question.
On Tuesday, the company issued a rebuttal to the report, defending its operations and acquisitions. On Thursday, the company issued another press release announcing that it had appointed a special committee to review one of these acquisitions. However, that’s not the only affect that the Hindenburg short report is having.
In fact, due to the report, GMP Securities analyst Martin Landry has decided to place the company’s rating and price target under review. Here’s what Landry had to offer in a note:
We believe that management’s credibility may have been impacted by the allegations raised in this report… It is unclear at this point how the company will re-establish trust with investors. Hence, until we have more visibility on the action plan of Aphria’s board of directors, we will put our rating and target under review.
Nonetheless, the new short report focused on new accusations. In particular, the report focused on Liberty Health, a company backed by APHA. In the report, the author said that it has uncovered multiple irregularities that raise more questions around believed undisclosed insider self-dealing.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of Aphira, the news has been mixed. With each short report, we see dips and with each response from the company, we’re seeing gains. Nonetheless, it seems as though the company has the upper hand in the battle now, leading to excited investors and gains in the stock. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:13), APHA is trading at $6.12 per share after a gain of $0.58 per share or 10.47% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on APHA. In particular, we’re interested in following the story surrounding the company’s review of one of its acquisitions and the continued battle between the company and the short report author. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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