This post first appeared on Micro Cap Daily
Auxly Cannabis Group Inc. (CVE: XLY) has seen its stock price grow and decline multiple times in the past twelve months. The XLY price managed to grow to $1.5, and even exceed this level as many as three times in a single year, but each time, the surge was followed by almost just as large a decline. As a result, the stock price was seen by many as unstable and volatile.
However, since 2019, these massive movements from $0.75 to $1.50 decreased significantly. The price is still not completely stable, but its fluctuations are much smaller since the beginning of the year. The price has mostly been either just below $1, attempting to breach this resistance level and grow further, or it stood right above its largest support at $0.75. Every move between these two positions was quick, and the price rarely spent time in between. The smaller oscillations make it a safer investment, and while the price is currently low — it does hold a promise of large returns once the growth returns.
Who is Auxly and what does it do?
Auxly is a vertically integrated cannabis company that provides financial solutions to cannabis license applicants. While the company was founded with this goal in mind, it has since grown to span through the entire value chain of the cannabis industry. It has grown to become economically resilient, flexible, and it developed improved product margin dynamics which allows it to create long-term value for its shareholders.
Auxly is comprised of professionals that contribute their vast knowledge about every aspect of the cannabis industry. This includes cultivators, product innovators, developers, distributors, and others. Each individual in the company is there to provide their own unique perspective on the company and make the cannabis industry better.
As the company’s business takes shape, it seeks out new opportunities, that typically end up setting the foundations for new partnerships. These strategic partnerships then bring numerous advancements, as well as profit, to both, Auxly and the companies it works with. And, of course, Auxly’s shareholders, who continue to support the firm.
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Auxly’s stock price volatility decreases in 2019
As mentioned earlier, XLY stock price has seen quite a volatile period in 2018, particularly after it suffered one of its worst drops in May 2018. The company’s stock had just started to recover when they announced the resignation of the firm’s Director, Ian McKay. McKay left the firm after becoming the CEO of a federal agency, Invest in Canada.
The stock then spent about two months with its stock price between $1 and $0.75, after which it surged following the announcement of a strategic partnership with Cannabis OneFive, in August. August was a busy month for the company, which also acquired a leading Canadian contract research firm, KGK Science. They also entered an international supply agreement with Aphria, as well as a purchase and sale agreement with Lotus Ventures.
This was a great time for the company, as well as its stock price. However, by mid-September, the stock price started dropping again, after the company partnered with FSD Pharma. While the company’s other ventures allowed its stock price to surge once again, the partnership with FSD Pharma significantly decreased it after Auxly discovered “contractual breaches relating to FSD Pharma’s management and staffing obligations of the JV Facility, as well as significant concerns regarding certain aspects of the buildings’ infrastructure.”
After requesting that FSD Pharma resolves the problems, and even offering to help — FSD Pharma failed to oblige, which resulted in a termination of the joint venture. While this did not impact Auxly materially, nor did it affect the company’s strategy, it was still a big factor in damaging the company’s stock price.
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But, with FSD Pharma out of the way, the firm was able to continue making healthy partnerships and improving its business, which is what led to the stock price attempts at growth. While they are mild, and so far unsuccessful — the Auxly is well on its way to recovery from FSD Pharma’s negative influence, which is what makes it a great investment, particularly now while its stock price is still low. We will be updating on Auxly when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with Auxly.
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Disclosure: we hold no position in Auxly either long or short and we have not been compensated for this article.
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This post first appeared on Micro Cap Daily