Auxly Cannabis Group Inc T.XLY

End coming soon

[settoretire]

Cantor Fitzgerald analyst Pablo Zuanic on Monday downgraded Canadian cannabis companies Auxly Cannabis Group Inc. cbwtf ca:xly and Fire & Flower Holdings fflwf ca:faf to neutral from buy in the wake of steep price competition in the sector. Zuanic cut his price target for Fire & Flower to C$2.60 ($2.02) a share from C$9.50 a share in the wake of "more draconian measures on the pricing front than management may have initially envisaged." Zuanic reduced his price target for Auxly to C$0.08 a share from C$0.20. "We think Auxly could still be an attractive target...but the convertible debt held by [British tobacco company] Imperial Brands uk:imb may deter interested parties," Zuanic said.

[CorpFMan79]

The convertibles were used to raise lots of money without upfront dilution (ie dilute cheap founders shares) in a bubble so mgt could profit at the expense of shareholders. Now the convertibles pay interest in shares and dilute shareholders and leave them with lossses. Never invest in a company that issues convertible debt before they have free cash flow.

[halfcentman]

.... Unless you expect the holder of the debt to at some point convert the debt and take the company private at a premium to today's prices. Have been patiently buying.