The short seller that accused Aphria of being a 'shell game with a cannabis business on the side' declares victory, but the stock is rallying
- The short seller Quintessential Capital Management declared victory on its Aphria short thesis Friday after the cannabis producer said its CEO and one of its cofounders were transitioning out of leadership roles.
- Quintessential previously said Aphria's stock was worth zero, accusing the company of being a "shell game with a cannabis business on the side."
- Aphria reported disappointing quarterly results on Friday.
- Watch Aphria trade live.
Aphria was rallying Friday, up 8.51% at $7.13 a share, after the short seller Quintessential Capital Management declared victory on its bet against the company.
Shares had been lower by more than 2% in premarket trading before news broke that two executives including the company's CEO were leaving their roles. Quintessential welcomed the news on Twitter and ambiguously said it was "moving on" from the company.
"We welcome the latest executive changes at Aphria which clearly vindicate our short thesis," Quintessential tweeted Friday morning. "With a new management team the company has a chance to a brighter future and we are accordingly moving on to new projects."
Quintessential did not immediately respond to Business Insider's request for comment on whether it had closed its short position.
The cannabis producer on Friday announced its cofounder Cole Cacciavillani and its CEO, Vic Neufeld, would transition out of their executive roles in the coming months.
On December 3, Quintessential described Aphria as a "shell game with a cannabis business on the side" and said the stock was worth zero. The firm accused Aphria of announcing acquisitions in July that were "largely worthless" and that it said were used to divert as much as $700 million, or nearly half of its total net assets. Aphria denied the allegations.
Aphria shares plunged by 50% in the wake of Quintessential's allegations, bottoming out at $3.75 a share on December 6. They have since recouped a large portion of those losses.
The cannabis producer on Friday announced disappointing second-quarter results. It lost an adjusted 0.01 Canadian dollars a share as net revenue grew 63% versus a year ago to 21.67 million Canadian dollars, or $16.3 million. Wall Street analysts surveyed by Bloomberg were looking for adjusted earnings of 0.02 Canadian dollars on revenue of 28.77 million Canadian dollars.