The biggest piece of news from the cannabis markets came from Aurora Cannabis (NYSE: ACB), a company which has been in the spotlight of the financial press for the past few days now leading up its recent financial results.
While the figures reported by Aurora were somewhat disappointing, it seemed at first that the markets weren’t particular shook by the fact that the company still reported a loss. However, that all completely changed when Aurora made matters worse by saying they won’t be turning a profit at all until next year, an announcement which sent the stock plummeting by almost 10 percent.
The company’s management also backed off from previous predictions that it would turn a profit sometime in 2019, instead of saying that Aurora won’t have any profitability until sometime in 2020.
Considering the amount of uncertainty that’s surrounding large-cap cannabis giants such as Canopy Growth (NYSE: CGC), which has seen its shares fall significantly after reporting a large, unexpected loss for the quarter, Aurora is definitely in a bit of hot water as short-sellers are likely to continue eyeing the stock for signs of weakness.
“We provided that guidance … because we assumed there would be a more aggressive roll-out of retail outlets and if that was the case, we would have no problem reaching that milestone,” said Aurora Cannabis Chairman Michael Singers according to Reuters. “Based on our internal forecast, we are very confident that we are going to reach profitability in fiscal 2020.”
This was the last thing the cannabis investors wanted to hear, even from a company as established as Aurora. Over the past few months, investors have been getting fed up with high growth figures without any solid profits underlying these expansions.
Unlike the tech industry, it seems that the marijuana market has a limit to how long it’s willing to wait for profits. While it seemed investors were willing to wait for the end of the year, the prospect of waiting until 2020 to see any initial profits seemed to much to accept.
Shares of Aurora Cannabis fell by 8.93 percent in response to the news, hitting C$7.75 per share and reaching a new six-month low in the process. Investors have seen Aurora fall significantly over the past few months, hoping that the cannabis giant would be able to report some kind of a silver lining in the form of a quarterly profit, even if only a minuscule one.
Instead, sentiments surrounding the company are expected to get worse. However, Wall Street analysts who consider Aurora to be the top pick in the sector aren’t likely to change their tune. Vivien Azer, considered by many to be the top cannabis analyst on Wall Street, has remained a vocal supporter of Aurora throughout 2019, and this volatility most likely won’t change her underlying opinion of the company’s fundamentals.
Aurora Cannabis Company Profile
Aurora Cannabis Inc., headquartered in Edmonton, Canada, cultivates and sells medicinal and recreational cannabis through a portfolio of brands that include Aurora, CanniMed, MedReleaf, and San Rafael ’71. Although the company primarily operates in Canada, Aurora has expanded internationally through medical cannabis exporting agreements or cultivation facilities in more than 20 countries. – Warrior Trading News