Is Aphria a Marijuana House of Cards or a Bad-News Buy?

After short-sellers questioned the company’s recent acquisitions, shares in marijuana stock Aphria Inc. (NYSE:APHA) have crashed over 50% this week, and as a result they’re trading 72% below their peak in September. Short-sellers are smiling, but are they right to bet against Aphria long term? Management’s response, including a decision to buy more shares and launch an independent investigation, suggests Aphria’s shares could be on sale, but there are still questions that investors need answered.

Bought the rumor, selling the news

Marijuana stocks, including Aphria, rallied sharply higher in the first nine months of 2018, ahead of Canada’s recreational marketplace opening for business on Oct. 17. Since then, it’s been tough sledding for every stock in this emerging market. 

IMAGE SOURCE: GETTY IMAGES.

Canada’s recreational sales could eclipse 4 billion Canadian dollars in 2019, according to Deloitte, but reaching that number will require a big increase in supply to meet demand and the

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