Lexaria Corp. (OTCMKTS:LXRP) Explodes On Marijuana News
Lexaria Corp. (OTCMKTS:LXPR) is yet another company that has decided to enter the medical cannabis business. This is not an uncommon thing recently as more and more enterprises venture into the sector.
LXRP, a company that has a history in the oil & gas industry seems to have decided that its shareholders can profit after such an announcement and is starting a joint venture with another mining entity that turned to the cannabis sector, called Enertopia Cor. (OTCMKTS:ENRT).
This provided for a massive 411% jump in price for LXRP‘s stock yesterday, closing at $0.29 per share, as it finally did some movement after a long period of standing still. The volume of traded stock was the highest in the tickers history, as more than 1.4 million shares changed their owners, generating $406 thousand in trade value.
The company financials don’t provide much comfort but LXRP is at least generating revenues. Below you can check the numbers of prime interest from their annual report covering the yearly period ended October 31, 2013.
- cash: $65 thousand
- current assets: $146 thousand
- total assets: $3.5 million
- total current liabilities: $1.4 million
- revenues: $1 million
- net loss: $343 thousand
The revenue is good, despite the company is still unable to operate at a profit, but what bothers us the most is the very low amount of cash that LXRP has on hand. ENRT looks far worse with similar cash on hand, no recent revenues, a total of $374 thousand in sales since its inception in 2004 and an accumulated net loss for the same period of $6.2 million.
Still, they are claiming that they should be able to get larger cannabis projects that might be “out of reach of a smaller company”. This sounds strange, because we don’t really consider any company that has below $100k on hand large, or even average for that matter, and we didn’t think that anyone would.
And yet, the news proved to be beneficial for the people that owned LXRP shares before yesterday. ENRT shareholders were not as lucky as the company stock manged to make only a small 14% climb, compared to LXRP‘s burst.
However, there is a possibility for a correction at any time, so both companies better keep bringing in good news. In any case, we would advise you not to buy on press releases and take your time to do your due diligence and weigh out the risks.
Other stocks of companies that have been in the medical cannabis sector longer, like Medical Marijuana, Inc. (OTCMKTS:MJNA) and Hemp, Inc. (OTCMKTS:HEMP) are going through a tough period lately as they reached quite high market caps and began to slide in price.
