Today was a major day for cannabis companies and investors alike. While a number of major producers have reported their earnings, November 14th was a crucial day for the industry as its two largest companies, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) reported their quarterly earnings. Both companies, which had seen significant losses in previous quarters, had seen their market value tumble, and investors were curious whether this trend would continue. As it turns out, losses are continuing to mount, with Aurora Cannabis, in particular, deciding to scale back its earlier expansion plans.
The first thing Aurora reported was a significant decline in revenue in comparison to the previous quarter. Income from cannabis sales had fallen by 24% from C$98.9 million to just C$75.3 million. Net income ended up at just C$12.8 million, or just 12 cents per share, a significant decline from the C$105.5 million seen a year ago.
If this news wasn’t bad enough, Aurora also announced that it had decided to halt construction at one of its major European cultivation facilities, as well as delay the final construction of its major Aurora Sun facility in Canada. With continued supply bottlenecks in major Canadian provinces such as Ontario and Quebec, it didn’t make sense for Aurora to continue on ahead with its expansion plans, especially since having more cannabis to sell in a difficult market means it will only end up selling it for even less.
“In order to capitalize on this global market, we recognize the need to be nimble and proactive. To enhance our financial flexibility and position us to take maximum advantage of future growth opportunities, we have also taken decisive steps to immediately strengthen our balance sheet,” said CEO Terry Booth stated in an official press release after the quarterly results were posted.
Other cannabis companies have posted mediocre quarterly results as well. Tilray and Cronos Group both reported their earnings on Tuesday, which weren’t all that impressive. Canopy Growth (NYSE: CGC), Aurora’s closest competitor in size, also posted its results on Thursday. The cannabis giant ended up seeing a significant loss in revenue as well alongside reporting continued losses. Large-cap cannabis stocks across the board seem to be doing quite poorly at the moment, with most investors have lost confidence in companies just a few months ago seemed to be unstoppable.
Shares of Aurora ended up falling by 6.6% in light of the news, with the company having lost almost two-thirds of its market cap over the past six months alone. With these recent results now having come out, it more or less confirms that being a big, respected company in the marijuana industry doesn’t mean much for stability and security.
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 25 countries. – Warrior Trading News
