Report: Scheme could have 'catastrophic consequences' on APHA share price
U.S. stocks are comfortably higher, as traders cheer a cease-fire on the U.S.-China trade war. Among the stocks reacting to the truce is farm equipment concern Deere & Company (NYSE:DE), which is higher on plans for China to buy U.S. agricultural products. Meanwhile, two weed stocks are making huge moves in opposite directions: Cronos Group Inc (NASDAQ:CRON) is higher on buyout buzz, while Aphria Inc (NYSE:APHA) shares sink on a negative report. Here's a closer look at what's moving the shares of DE, CRON, and APHA.
China Agriculture Deal Boosts Deere Stock
Deere shares are up 5% to trade at $162.63, set for their highest close since March, after the White House said "China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other production from the United States," with the Asian nation vowing to start buying from U.S. farmers "immediately." As such, DE stock is on pace for its best session since mid-May, and is set to take out resistance in the $160 region.
DE call options are flying off the shelves today. So far, roughly 20,000 calls have changed hands -- twice the average afternoon clip. That's compared to roughly 6,000 puts traded thus far. Weekly 12/7 calls are most popular, with possible spread or roll activity spotted at the 165- and 170-strike calls.
Altria Reportedly in Talks to Buy Cronos
Cronos Group stock was last seen 29% higher to trade at $11.83 -- and was temporarily halted -- after Reuters said cigarette maker Altria Group (MO) is in early talks to buy the cannabis concern. As such, CRON is pacing for its highest close since mid-October, just before Canada legalized recreational marijuana use. Prior to today, the shares had been struggling to break north of their 50-day moving average.
Several Cronos shorts could be feeling the heat today. Short interest grew 11.5% in the past two reporting periods, and now accounts for more than 17% of the security's total available float.
In the options pits, CRON has seen roughly 45,000 calls change hands already today -- six times the norm, and three times the number of puts traded. Call volume is pacing for the 99th percentile of its annual range, with speculators buying to open the now in-the-money December 10 calls.
Report Questions Aphria Acquisitions 'Scheme'
The shares of cannabis producer Aphria are reeling today, after a negative report from Hindenburg Research and Quintessential Capital Management. The report noted that Quintessential opened a short position on APHA, saying that while the company seems successful on the surface, it "hides instead a more sinister reality." Specifically, "Aphria is part of a scheme orchestrated by a network of insiders to divert funds away from shareholders into their own pockets," the report says, calling the company's Latin American acquisitions "virtually worthless," and saying the uncovering of the scheme "would have catastrophic consequences for its share price."
APHA shares were last seen 18.6% lower to trade at $6.43, and earlier touched a new all-time low of $5.60. The stock just began trading on the New York Stock Exchange (NYSE) on Nov. 2, and today is one of the worst on the Big Board. It has surrendered more than half its value since peaking at $13.45 on Nov. 7.
The stock is also on the short-sale restricted list today, though bears are quite active in the options arena. About 6,000 APHA put options have traded so far -- 54 times the norm, and more than 10 times the previous all-time high of 502 puts exchanged on Nov. 28. It appears some speculators are betting on more downside for the pot stock, buying to open December 7.50 puts.