Duediligence33 wrote: Prof and GoBlue2016 please dont be offended by this commentary
Sunny please respond
I promised to make a case for why the sp could go to low $ 5.00 if I got stopped out at
$ 6.09. To be fair I will give both sides of the thesis as I do not want to be labelled either a pumper or basher. I am an observer and make commentary as I see it.
My motive is simple : to make money and not lose it. I hope you all can do the same and wish all success in gettng there.
First a little history, I have many times in past times purchased a company and then it became the best company ever with the greatest potential and I would recommend it to my friends and family.
I would HOLD it even if it dropped always believing it would come back. I would average down as it dropped and went deeper in and even borrowed more money. At that point I was so deep in financially that I would bristle at any criticism or any question of company success and I would call those people bashers. It would make me nervous and angry. I understand !
In early November 2016 I first got 30,000 shares of Aphria at $ 3.95 (just before the $ 4.00 pp) and I was thrilled by 3 weeks to see $ 7.50. I foolishly did not sell until it retraced to $ 5.80 but still made cash.
In December 2016 it dropped to $ 4.50 and I waited to Dec 30 to buy back in at $ 5.00. After the financials I sold at $ 5.75 and bought back in over
$ 6.00 for the run up to TSX listing and then at the April 11 run up and I got out just under $ 8.00 as it dropped.
Now last week April 28 it hit near $ 6.00 again and then it ran to over $ 6.50 only to drop back to $ 6.10 May 5 – so I bought again at $ 6.15 and I posted that I would have a stop loss at $ 6.09 and if it broke that then I would give 5 reasons why it could drop to the low $ 5.00 or worse. Today I lost 6 cents so what to do next.
I do want to own Aphria and not trade it but it is very hard to hold as it drops and the accounts turns RED and cash is lost.
Here are the 5 reasons for a drop to $ 5.00 and 5 reasons for a recovery back to $ 7.00
DOWNWARD
1. The sentiment of the whole MJ sector is bearish – just look at the previous leader
WEED going from $ 13.30 on Feb 14.17 to $ 8.30 today
2. The Technical Analysis chart has turned bearish with barrier $ 6.00 close at $ 5.91
and lower lows and lower highs are being established from the peak of $ 8.70
3. The Sell the News event has occurred after the bought deal announced today. Good for the cash in but bad for the dilution of shares albeit 25 % was for debt and not equity. Further news of HC approval is BAKED in. Imagine if it was denied. SP would be $ 4.00 if HC limited APH to only 55,000 sq ft. If Phase 2 is not approved then neither would pahse 3 or 4 and APH would burn 200 million for empty non producing greenhouses. So HC approval is a GIVEN in this sp. The sell news event of April 13 legislation has raised more uncertainty over the provincial download of responsibilities.
4. The Fundamentals are basically good with sunlight and no hydro cost etc and experienced management and positive EBIDA but the last quarter revenue was a little less due to Veterans effect but how will next quarter show increase if the phase 2 is not approved and not functioning nor producing more harvest.
5. The Seasonality of sell in May and go Away mentality has the traders with hot money to take a break and come back in September. The general markets are all time high and are due for a correction and all ships will drop in a lower tide of cashing out – especially the speculative ones in the nascent MJ market devoid of real earnings history and though APH is the only one with positive cash flow it will affected but just not as severe compared to the cash bleeders like WEED.
UPWARD
1. The sentiment of the whole MJ sector could reverse and turn bullish for some unknown reason
2. The Technical Analysis chart could turn bullish with the $ 5.91 low going higher than last weeks low of $ 5.85 and higher highs from last weeks $ 6.80. Back over $ 6.00 first step tomorrow and stay over.
3. The bought deal announced today of $ 6.50 is good for the cash and several insiders have purchased shares over $ 6.00. HC approval will cause a run up. Florida and other USA states give accretive value and Arizona Copperstate provide more revenue and cash.
4. The Fundamentals are very good with free sunlight and no hydro cost etc and very experienced management and positive EBIDA. The last quarter revenue was one time temporary less due to one time Veterans effect next quarter will show an increase because of more oil sales and high prices and other revenue form USA.
5. The Seasonality of sell in May and go Away does not affect this new sector of a historic prohibition ending of Marijuana criminality and the legislation that was presented allows for IMMEDIATE recreational mail order from LP by passing the provinces.
The general markets will stay high and go even higher with the low interest rate environment. Investors will re enter the speculative nascent MJ market looking for real companies with earning and APH is the only one with positive cash flow it will overtake the market capital of cash bleeders like WEED that are not focused like APH on the core business but scattered and too diverse for cost control profitability. Aph is a builder not a buyer with dilution paper shares or desperate in making gypsy swaps. The turtle beats the hare !