A few things on my mind for short, medium and long term I just realized American exhanges are closed tomorrow for Martin Luther King, Jr. Day. Markets were depressed on Friday so maybe people were keeping their powder dry into a long weekend. Hopefully there is a market wide upswing on Tuesday to regain ground. I also hope the TSX takes advantage Monday to force the NASDAQ to gap up on Tuesday as well. Biden is inaugurated on Wednesday, anything positive said about marijuana this week will be rocket fuel.
I'm reading conflicting reports of APHA/TLRY closing at end of March or early April when management said late April or early May. Maybe it's a mistake, but that's a big typo and I'd trust the analyst after speaking with management closer. Management would be keeping public expectations in check due to regulations across multiple countries. No antitrust regulations should impede us due to all the competition out there and it would be wise for us to close quickly to solidify the global footprint for any future partnership negotitations. Send me my votes in the mail because I am voting YES on all of them. I love management's decision to wait and see how the landscape is in America before signing a partnership that won't end up being optimal.
I'm hoping APHA rises to close the 33% gap with TLRY rather than TLRY drop. There is a lot of money just sitting on the table right now. A lot of companies are rising because of Aphria, let's hope they do us a solid for a change and don't drag us down. Tilray needs to be EBITDA positive next earnings as they forecast or we'll take a hit. I'm not sure whether I want Aphria to announce Q3 earnings in April with free cash flow before or after the merger takes place. Beforehand in an ideal world but I wonder if that would move the needle so close to merging as Q3 ends end of February anyways. Merging so close to an earnings report is what is stressing me out near term.
I hope Aphria is already planting crops for Tilray's portion of their first harvest in a 12-16 week grow cycle to save capital immediately. Reducing grow costs from $5.00 per gram by TLRY to $0.79 is massive and management has commented costs can be reduced further likely just economies of scale in Aphria Diamond. If we got to $0.70 we could continue winning any price war with Canadian LPs, turning the knife even further. The margins in American rec is extra gravy. David Klein saying he expects to sell Canopy weed in the US by August is extremely bullish.
Finally, it will be exciting heading into the spring and summer with Sweetwater sales getting on our earnings. We have lots of time to start bringing Aphria branded products to stores. I'll only be buying Sweetwater IPA this summer because it was amazing when I got my hands on them, I can't wait to expand their products in Canada. Any RIFF beer or Solei hard seltzers will be a bonus, those theoretical proof-of-concepts shared online look amazing. Can't wait to start drinking them around friends to get them on the Aphria train as well when COVID passes, whether it's weed or booze, likely both haha. We'll be the first weed platform so watching how consumers see Aphria in a liquor store and then behave in cannabis stores, whether they are new to weed or not, will be great to start driving brand loyalty. It will be a very fun discussion to have in the future.
Anyways, those are my thoughts for now :) APHA+TLRY is 9 billion CAD now but Canopy is over 16 billion. We're well diversified with income from weed, alcohol, hemp and distribution streams now! Let's hope we're the new Tesla of 2021 dominating discussions! Good luck everyone!