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CannTrust Holdings stock price skyrockets following impressive financial reporting results

Canadian-based marijuana producer CannTrust Holdings Inc. (TSX:TRST) (OTC:CNTTF) announced favorable financial and operating results Wednesday for the three and nine months ending September 30, 2018, causing the company’s share price to soar Thursday. The stock price closed up 2.18 Canadian dollars ($1.66) to CA$9.40 ($7.15) on the Toronto Stock Exchange, yielding a 30 percent gain day-over-day. The increase pushed CannTrust’s valuation to CA$988 million ($751 million). And although the company did lose half those gains in trading on Friday, it was still an impressive jump, nonetheless, considering the current state of the market.

The price hike resulted from investors reacting to CannTrust’s reports of record-level revenues of CA$12.6 million ($9.5 million) in the third quarter of 2018, a 105 percent increase over the same period last year.  Growth was driven by a 61 percent increase in active patients as customers compared to the prior year.

Unlike many other marijuana companies, CannTrust has a positive net income with earnings per share of .151, further supporting the company’s financial health and causing investor sentiment to rise.

[Hemp provisions guaranteed to be in new Farm Bill: McConnell]

"We are extremely pleased with our Q3 results that are a testament to the success of this Company and the incredible progress that we have made in such a short period of time. With the opening of the recreational market and the numerous opportunities that our Company is positioned to capitalize on, this is only the beginning," said Eric Paul, Chairman of the Board and outgoing CEO in a statement. "The appointment of Peter Aceto as CEO, a globally recognized and seasoned professional, will be the perfect [complement] to our leadership team and will lead our Company into the next phase of our rapid growth."

The Ontario-based cannabis producer also entered into supply agreements with nine Canadian provinces to supply recreational cannabis across Canada during the quarter. Additionally, they spread their global footprint in the marijuana markets through making the first shipment of the only Danish-approved cannabis oil to Denmark and partnering with a university in Australia to perform a study on CannTrust CBD capsules in slowing the progression of ALS.

CannTrust started as Canada's only pharmacist-founded medical cannabis producer and now operates a 450,000-square-foot Niagara Perpetual Harvest Facility. They’re also working on a 600,000-square-foot greenhouse expansion — all of which is being done to fulfill the growing demand for product ever since Canada legalized cannabis use in mid-October.

CannTrust on the New York Stock Exchange?

Subject to approval, the company wishes to list its common shares on the New York Stock Exchange. According to the newly appointed CEO, Peter Aceto, now that CannTrust has established itself as a major cannabis producer in the Canadian market, now is the time.

"CannTrust has firmly established itself as one of the top licensed producers in Canada with a global platform rooted in science and innovation,” said Aceto in a statement. “A U.S. listing is a natural step forward in our evolution as we look to broaden our investor base and expand our business on an international scale."

Approval by a U.S. exchange is seen as a considerable company milestone and implies that the company has become a significant enough player in the cannabis markets to have such an opportunity. Cronos Group (NASDAQ:CRON) was the first marijuana company to move to a U.S. exchange at the end of February when it began trading on NASDAQ. Canopy Growth Corp (NYSE:CGC) became the first marijuana stock to list on the NYSE shortly after. Tilray (NASDAQ:TLRY), Aphria Inc. (NYSE:APHA), and Aurora Cannabis Inc. (NYSE:ACB) are also listed on U.S. exchanges.

[Canopy Growth’s Linton: “For sure there’s a marijuana bubble”]

While CannTrust is still substantially smaller than the aforementioned companies with a market capitalization of $742 million — compared to Tilray’s $10 billion and Canopy’s $11.9 billion — but their sales are beginning to be more in line with the larger and more expensive players. If the investor base expands from trading on a U.S. exchange, their valuation could continue upwards with their rivals.

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CannTrust management expresses optimism about the future

Back in early October, CannTrust announced that co-founder and CEO Eric Paul would step down from his role and that Peter Aceto, former CEO of online bank Tangerine, would take his place. Paul remains Chairman of the Board, however, and he stated that the appointment of Aceto “will be the perfect [complement] to our leadership team and will lead our company into the next phase of our rapid growth." Both executives also made optimistic remarks regarding the Q3 results and the current state of the firm.

[Revenues fall in Canopy Growth’s worst quarter in three years]

"Our Q3 results attest to the great work Eric and the Company have done, and I look forward to building on this platform. The legalization of the adult consumer recreational market is only the beginning of many new and exciting opportunities for the Company. We look forward to boldly executing on our vision for CannTrust both at home and abroad," said Aceto in a statement.

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