Aphria Inc. APHA

Seeking alpha article:bearish & pessimistic(tlry &apha)merB

[Humanist]

SA is definitely starting the year on a negative note towards APHA & TLRY  merger

5 Dangerous Bubble Stocks: Don't Be The Bag Holder

Dec. 30, 2020 1:03 PM ET

 Includes: ABNB, APHA, DASH, TLRY, UBER, ZM
Aphria/Tilray (the companies are merging) is in a similar boat in that there's no mechanism to protect the incumbents from new entrants.
I'm personally skeptical about the safety/efficacy of marijuana-based products whether it's medicinal or recreational. However, this skepticism is not required for my bearish stance on these stocks.

Even if the products are great, the real challenge to those already in the space will be full legalization in the U.S.

Full legalization is coming to the U.S., and as we have seen in Canada, (where legalization is much further along) when that happens, anyone can pour into the space and disrupt the high gross margins that are being enjoyed today. Large swaths of farmland can be converted to grow cannabis and just about any retail space can become a dispensary.

Supply of anything cannabis will be high and prices will fall dramatically.
I believe the market may have conflated volume growth with profit growth in this space. It may very well be the case that sales volumes will increase explosively for the foreseeable future, but because of the upcoming supply glut, it simply will not translate into sufficient profits.

At just a couple billion of market cap, these aren’t of the same magnitude as the other bubble stocks we are discussing today, but the investment case looks rather ugly. Profits are negative today and increasing legalization is poised to make profitability even worse.
 
For the full article link below
https://seekingalpha.com/article/4396737-5-dangerous-bubble-stocks-dont-be-bag-holder