Shares of Aurora Cannabis (NYSE :), (TSX 🙂 🙂 took a little more than 8% tumbling yesterday, exacerbating last week's decline of around 9% after the marijuana grower in Edmonton disappointed in the fourth quarter after the closing bell on 12 September. The stock closed yesterday at US $ 5.45 in New York and C $ 7.24 on the S & P / TSX Composite, which claim the title for the worst-performing stocks on the major Canadian stock market on the day.
The company, now recognized as the largest cannabis producer in Canada, not only met analysts' expectations last week, but missed its own revised guidance, which was lowered in early August.
Aurora Cannabis price chart
Last week the Edmonton-based producer reported sales of C $ 98.9 million (US $ 74.65 million) for the quarter ended June 30, an increase of 417.8% over C $ 19.1 million (US $ 14.42 million) in the same period last year. But the figure was below the company's own target value from C $ 100 million (US $ 75.48 million) to C $ 107 million (US $ 80.77 million). Analysts expected net sales of around C $ 108 million (US $ 81.52 million).
The company also reported a loss before interest, taxes and depreciation of C $ 11.7 million (US $ 8.83 million), not quite the prediction of an unadjusted profit that Aurora officials had intended for this. quarter.
Deficit "Should not have happened"
In an interview broadcast on television, Aurora & # 39; s chief corporate officer Cam Battley said that the loss of income should not have happened & # 39 ;. He further explained that the deficit can be traced to & # 39; non-core & # 39; revenues, including analytical testing and patient counseling.
Aurora officials have also pointed a finger to the continuing problems with the slow rollout of licensed cannabis stores in Canada to explain sales figures. But corporate officials are optimistic that the introduction of the so-called 2.0 cannabis products – the oil, topicals and edible substances – that will be legalized in Canada next month and scheduled to be available at retail level mid-December. much smoother considering the existing retail network.
The only measure from the latest earnings report that passed by with little fanfare that investors may want to keep an eye on is that Aurora has made it clear that it can claim the title of the largest Canadian cannabis producer, in terms of volume grown, turnover and turnover, surpasses the other big name in Canadian cannabis – Canopy Growth ] (NYSE :), (TSX :).
Sales of canopy growth stagnate
The turnover of Aurora from the last quarter has almost doubled. For comparison: the growth of Canopy stood still. And Aurora wins in all sectors – medical, recreational and bulk sales, which puts the company on a diversified basis.
It was clear how Aurora succeeded in becoming the sales manager – it bought its way to the top. It bought high-performing companies with proven growing activities, eliminating them as potential competitors. These companies include Medreleaf, Cannimed and Whistler Medical. This road to expansion, however, cost money. Aurora has C $ 640 million (US $ 483.10 million) in debt and a healthy C $ 314 million (US $ 237 million) in operating losses.
Of course, Canopy Growth is still the largest market capitalization cannabis company with a value of US $ 9.67 billion (C $ 12.8 billion), compared to Aurora US $ 5.58 billion (C $ 7.38 billion) ).
The market reaction to the results of Aurora was clear – investors are not satisfied. The inevitable question arises: when will it yield a profit? These are the same questions that cast a shadow across the entire sector and serve as a measure of the patience of investors who run out.
But Aurora gave an answer. Again, given the market reaction and the hit the company's stock price has taken, investors didn't like it that much. In a television interview, Michael Singer, the company's executive chairman, said profitability could be achieved by the second half of 2020, but he added a few caveats that all related to improvements in retail sales and smooth edible and derivatives rollout.
CannTrust to be picked up September 23
As expected, CannTrust Holdings (NYSE :), ( TSX 🙂 will be removed from Canada's main stock market index on September 23. The besieged Ontario-based cannabis grower has been in free fall since earlier this summer when it was revealed that he had grown cannabis in non-licensed rooms in his greenhouses in Pelham, Ont.
That was the beginning of the downward spiral, with the company's stock dropping lower with every subsequent news item that revealed a deeper and deeper scandal. The company is now awaiting the question whether Health Canada will withdraw its growing licenses.
The news of the pending deletion, which was released last Friday, caused the shares to fall again yesterday and lost around 7% on both the New York and Toronto stock exchanges. It closed yesterday at US $ 1.50 (C $ 1.99)
CannTrust scrapping occurs about 18 months after it was added to the TSX in March 2018. Listing on the stock exchange requires that the shares of a company that are available for trading, or float, amount to 0.025% of the total value of the index. That figure is usually around the limit of C $ 500 million (US $ 377.42 million). The market capitalization of CannTrust has fallen to C $ 281.55 million (US $ 212.53 million).
In October 2018, a few days before marijuana was officially legalized in Canada, the stock reached its highest point ever of C $ 15.50 (US $ 11.45).
