Aphria Inc. (TSX: APHA)(NYSE: APHA) announced May 14 president Jakob Ripshtein is resigning, but did not offer an explanation, or a plan to replace him.
Ripshtein, who only joined a year ago and will leave June 7, is yet another executive-level departure from the Leamington-based licensed producer. The list includes former CEO Vic Neufeld and co-founders Cole Cacciavillani and John Cervini.
Turnover is common in the fast-moving cannabis industry, but can also be a sign of trouble.
Investors soured on MedMen Enteprises Inc. (CSE: MMEN) after the California-based pot company drew negative press over an investment scandal and saw a turnover of key executives. MedMen’s stock has fallen 14 per cent since the start of the year.
But Aphria’s case is a bit more of a mystery. The Canadian pot company suffered a heavy loss in its most recent quarterly results, but the stock has been holding steady. During the first three months of the year, Aphria’s stock was up more than 46 per cent, but since it has lost a quarter of its value and may be in danger of going lower.
Red flags for investors
A closer look at Aphria’s turnover suggests there might be some issues under the hood:
- Neufeld departed early in the year and chairman Irwin Simon has taken the role in the interim. But a large, influential company like Aphria should be attracting top-tier executives, yet there is no buzz of possible candidates.
- Ripshtein moved to Toronto to join Aphria uprooting his life in Connecticut where he was a chief financial officer with beverage giant Diageo. So for him to end up leaving just a year later suggests there could have been some internal issues brewing.
Bottom line
The public may never know the reasons for Ripshtein’s departure. But considering the hostile takeover bid by Green Growth Brands, and the short-seller report questioning Aphria’s Latin American acquisitions that sent its stock plunging, there are signs of trouble. Investors can only base their analysis on public information, and right now there are at least some pretty big question marks surrounding the company.
A good litmus test on Aphria’s performance will be how it handles the coming edibles market in Canada and whether management is prepared to take advantage.
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