Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

CannTrust Faces Delisting; Aphria Could Acquire Assets; Aurora Reports

By Investing.com (Brenda O'Farrell/Investing.com)ETFsSep 10, 2019 05:26AM ET
www.investing.com/analysis/canntrust-faces-delisting-aphria-could-acquire-assets-aurora-reports-200463147
CannTrust Faces Delisting; Aphria Could Acquire Assets; Aurora Reports
By Investing.com (Brenda O'Farrell/Investing.com)   |  Sep 10, 2019 05:26AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The dramatic and disastrous slide of CannTrust Holdings (NYSE:CTST), (TSX:TRST) continues. The Canadian cannabis company just keeps spiralling downward. Even when you think it can’t get worse, it does, and its stock drops lower again.

Yesterday, was no different. The stock lost 7.3% in New York to close at US$1.65 and was down 6% on the S&P/TSX Composite in Toronto, ending the day at C$2.19. The company has lost more than 80% of its value since late March.

CannTrust Holdings price chart
CannTrust Holdings price chart

In fact, CannTrust is expected to be dropped from the main Canadian stock index later this month. The news of the pending delisting is the latest blow leveled at the Ontario-based marijuana grower that was thrown into crisis earlier this summer when it revealed it had been growing cannabis in unlicensed rooms in its facility in Pelham, Ont.

Under Investigation

Since then, a series of reports — including the firing of its CEO, the withdrawal of all products from the market and for export and, the latest, how the company used black-market seeds leading to illicitly-grown pot being in the legal market — have pummelled the company’s reputation and stock price.

Health Canada, which regulates the marijuana growing operations, is still investigating. When the probe is completed, penalties slapped on CannTrust could include the revoking of its growing licences.

Index Woes

The Toronto Stock Exchange is expected to announce changes to the index on Sept. 13. If CannTrust is dropped, the sound heard will be that of a bottom being hit.

Inclusion on the index is determined by a multi-faceted formula, which includes its share of the overall index and the size of its public float. This block of shares must represent a minimum of 0.04 per cent of the overall index. Analysts have calculated CannTrust’s float at about 0.012% of the index.

Class-Action

If that was not bad enough, yesterday was the deadline for investors to be included in a class-action suit being planned against CannTrust in Canada. The suit includes investors who purchased stock between Oct. 1, 2018, and July 5. On July 8, CannTrust officials publicly disclosed that its facilities did not meet compliance standards.

The case alleges that:

"CannTrust and certain of its officers and directors made misrepresentations by issuing documents, public statements, and prospectuses, which represented that CannTrust was in material compliance with all laws, regulations, licenses and permits and failing to make timely disclosure of the unlicensed cultivation.”

Last week, CannTrust laid off about 180 employees. The workers represent about 20% of the company’s workforce in Ontario, mainly cultivation and customer service personnel. The move is designed to cut about C$9 million (US$6.8 million) in operating costs.

"We have made the extremely difficult decision to restructure our workforce to reflect the current requirements of our business," Robert Marcovitch, interim chief executive of CannTrust, said in a statement.

Will CannTrust Assets Be Sold?

As observers watch CannTrust swirl round the drain and openly discuss the damage its ongoing scandal has inflicted on the sector, other companies are eyeing its assets because it’s sometimes hard to drive by a good garage sale without slowing down to just see if there are any bargains.

No one has actually stopped yet to make an offer – at least not publicly, but they are thinking about it.

In an interview last month, Aphria (NYSE:APHA), (TSX:APHA) CEO Irwin Simon expressed the need to restore confidence, but refused to say if the Ontario-based marijuana producer would consider buying CannTrust assets. But he did not categorically deny it either.

And given Aphria’s last earnings report, where it unveiled its first profitable quarter, it might be in the market. Aphria earned C$15.8 million (US$12 million) in its fourth quarter that ended May 31 on revenue of C$129 million (US$97.8 million). Both revenue and earnings stood out in a sector that is awash with losses. But one of the smaller items of note from its disclosures was a mention of how it has improved its governance practices, a move its directors hope will help investors maintain confidence.

Aurora Cannabis Reports Sept. 11.

And speaking of fourth quarter reports, Aurora Cannabis Inc (NYSE:ACB), (TSX:ACB) will reveal its latest earnings tomorrow after the markets close.

Aurora Cannabis price chart
Aurora Cannabis price chart

The company’s preliminary results have set the stage for an increase in revenues. In addition, last June, the Edmonton-based grower that specializes in medicinal cannabis said it plans to expand into the consumer markets that includes concentrates and edibles. It will be interesting to see how investors will react.

CannTrust Faces Delisting; Aphria Could Acquire Assets; Aurora Reports
 

Related Articles

CannTrust Faces Delisting; Aphria Could Acquire Assets; Aurora Reports

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email