This week the pure-play marijuana fund ETFMG Alternative Harvest ETF (MJ) ended with a loss of about 2%. This ETF holds some of the largest cap cannabis stocks and is a great way to gauge the cannabis sector.
Tilray (TLRY) sells another facility
This week another company felt the effects of the downturn the cannabis sector has been facing for the last two years. TLRY announced this week that it will be closing its High Park Gardens facility which is a licensed cannabis greenhouse located in Leamington, Ontario. The closure of the facility is expected to yield $7.5 million in annual savings. High Park Gardens plans to shut down over the next six weeks.
This is part of TLRY’s global cost-efficiency and restructuring plan to finally achieve profitability.
Shares of TLRY have rallied substantially after their march low of $2.43 per share. The stock sits at about $9.50 per share right now but we believe that the rally will be short-lived if the company can not get operating expenses under control.
Aurora Cannabis (ACB) cools down
ACB was unable to maintain its momentum from last week after being downgraded last Friday and continued to sell off into this week. The stock attempted to break out and make fresh highs on Thursday but failed to do so and shares fell to about $14 on Friday. Investors are anxiously waiting for the announcement of a new CEO for ACB, as the company has said a couple weeks ago that this was coming in “the next few months”. Right now we believe that ACB remains highly speculative and susceptible to unfavorable market conditions if the market loses stability.
Innovative Industrial Properties (IIPR) raises additional capital
IIPR continues to raise capital. This week they announced the upsizing and pricing of an underwritten public offering of 1,348,389 shares of its common stock for gross proceeds of approximately $100.0 million. The offering is expected to close on or about May 29, 2020, subject to customary closing conditions. The Company has also granted the underwriter a 30-day option to purchase up to an additional 202,259 shares of its common stock. All of the shares are being sold by the Company.
The company plans to use this additional capital towards future acquisitions which are in line with the current acquisition strategy. IIPR stock was relatively unaffected by the news compared to past capital raises when the stock had fallen. It seems as if investors are comfortable now with the company raising money as they have shown repeated profitability and earnings growth.
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ACB shares were trading at $14.02 per share on Friday afternoon, down $1.32 (-8.60%). Year-to-date, ACB has declined -45.91%, versus a -5.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More…