Auxly Cannabis Group Inc (OTCMKTS:CBWTF) shares are battling for key support. The story here is really going to be about growth potential. As such, we wanted to circle back around the company’s recent financial data and the way that data was delivered to the marketplace.
Communications and messaging may not seem like a big deal. But in a high-growth and highly speculative market space such as cannabis, how that messaging is handled is probably far more important than it may be in large-cap stocks or more established market segments where there is more meat on the bone in terms of the focus of analysis. For pot stocks, much of the game of gaining a premium valuation – the benefit of the doubt – is going to be about how things are presented just as much as it will be about what is presented. In this vein, Auxly actually impressed us in their latest market communications materials surrounding earnings for the company’s financial and operational results for the three and nine months ended September 30th, 2018.
Auxly Cannabis Group Inc (OTCMKTS:CBWTF) operates as a cannabis streaming company.
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It provides funding for cannabis production; and holds contractual rights and minority equity interest relating to the operation of cannabis facilities. The company was formerly known as Cannabis Wheaton Income Corp. and changed its name to Auxly Cannabis Group Inc. in June 2018. Auxly Cannabis Group Inc. was incorporated in 1987 and is headquartered in Vancouver, Canada.
It provides funding for cannabis facility expansions, operations, and initial construction in exchange for minority equity interests and a portion of the cultivation production.
The company was formerly known as Knightswood Financial Corp. and changed its name to Cannabis Wheaton Income Corp. in May 2017. Cannabis Wheaton Income Corp. was incorporated in 1987 and is based in Vancouver, Canada, and became known as Auxly Cannabis Group Inc over recent months.
The company frames itself as a collective of entrepreneurs with a passion for the cannabis industry past, present and future. “Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.”
It’s How You Say It
According to the release, Auxly is a global cannabis company with assets in every segment of the cannabis value chain. Through three distinct verticals: Upstream, Midstream and Downstream, Auxly’s platform provides for a significant amount of operational flexibility and control resulting in improved margin dynamics. Auxly’s management team has prioritized the following objectives for each of the Company’s business segments.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action CBWTF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -4% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
A good example of the strength of communications here is given by the company’s messaging around its international growth potential: “International: In order to best address expanding global demand for cannabinoid-based products, the Company has acquired an 80% ownership in Inverell S.A. providing the Company with a long term, stable supply of CBD molecules to sell into the Company’s international distribution channels. In addition, to meet near term demand generated by the Company’s international channels, the Company signed an international supply agreement with Aphria Inc. to purchase up to 20,000 kilograms of cannabis products on an annual basis, during the term of the agreement. The Company is increasingly evaluating new opportunities across the cannabis value chain in North America and Internationally as several jurisdictions look to legalize cannabis use for medicinal and/or recreational use. The Company anticipates that the International segment of the business will become progressively more important to the overall strategy in the long term.”
Auxly Cannabis Group Inc (OTCMKTS:CBWTF) had no reported sales in its last quarterly financial data. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($295.8M against $0).
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