Cannabis investors were already well aware that Aurora Cannabis (NYSE: ACB) was going to have a tough quarter. Around a week ago, the company confirmed that it would be laying off 10% of its workforce to help save costs. To make matters worse, the firm’s long-time CEO, Terry Booth, is leaving his position in what amounted to a pretty major leadership shakeup. The final nail in the coffin, however, was the warning that the company could see goodwill adjustments of up to C$1 billion. All this together helped push Aurora’s stock to close-to-historic lows even before the firm officially announced its fiscal Q2 2020 results.
Now that the company officially released its full financial figures for the quarter, investors were hit by the bad news that the company’s losses were growing while revenues continued to shrink. Cannabis revenue came in at $63.2 million, in comparison to the $70.8 million seen just three months ago. It’s a massive drop for so short of a period, but it gets worse. Aurora’s adjusted EBITDA loss came in at a large $80.2 million, more than double the $39.7 million reported in the previous quarter.
“Despite delivering modest growth in our core medical and consumer business in Q2, we took immediate and deliberate actions to align our Company to current market conditions,” said Michael Singer, Executive Chairman and now Interim CEO since the departure of Terry Booth. “As announced last week, being a profitable cannabis company for our investors is the singular near-term focus for Aurora and we have begun to implement a business transformation plan where we intend to manage the business with a high degree of fiscal discipline.”
Overall, Aurora is in a pretty bad place, and few investors would have expected that 12 months ago the respected cannabis giant could have sunk to its current state. The company has lost over 85% of its market value, and many analysts are expecting the price of the stock to fall into the penny stock range.
Looking at the analyst ratings overall, investors can see a major shift in just a one-month period. Back in January, there were nine analysts with a buy rating, hopeful that the firm’s current cheap price would mean shares would go up. In comparison, there were just 6 analysts who held a neutral hold rating a month ago, and just four that had a sell. Now, the number of bullish analysts has shrunk to just four, while the neutrals have almost doubled to 11.
Time will tell how Aurora Cannabis fares, but what is certain is that the company is facing financial difficulties and will likely need to secure further funding to remain afloat. Unlike its larger rival, Canopy Growth (NYSE: CGC), which has billions in spare cash sitting in its bank account, Aurora is quite strapped.
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
