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Aurora Cannabis: Lives To Fight Another Day, For Now

Cornerstone Investments profile picture
Cornerstone Investments


  • Aurora is trying to reset its business after failing to reverse its declining revenue and ballooning operating costs.
  • We think the company needs to downsize aggressively in order to restore spending balance, including workforce reduction and shrinking footprint.
  • The U.S. is the only attractive international market but Aurora's hands are tied with its in-house disarray and leadership void.
  • The underperformance at Aurora continues and its viability is further threatened due to the ongoing pandemic.

Aurora Cannabis (NASDAQ:ACB) needs to hit the reset button but it is running into a wall of issues and adverse market conditions. The company recently announced a slew of bad news, ousted its long-time CEO and COO, and is appearing hamstrung by its frail financial position. Going forward, we think there is only one way for Aurora to remain a going-concern and survive in the long term which is to focus on being a profitable Canadian company and scaling back its unprofitable international operations.

(All amounts in C$)

Deteriorating Financials

Aurora is too big to be profitable in its current form. The company has one of the largest international footprints among global cannabis players but it is difficult to see the benefit of its sprawling global footprint. One way of looking at the issue is to benchmark the operating cost structure of the top LPs in Canada. Per the chart below, which includes three buckets of the most common operating expenses, Canopy (CGC) has the highest operating cost in dollar terms with its latest quarterly expenditures reaching a staggering $150 million. Aurora came in second with $107 million of quarterly expenditures which includes $29 million of sales and marketing, $7 million of R&D, and $71 million of general and administrative expenses. There are two observations to be made here: Aurora is overspending relative to its revenue and there is no near-term catalyst for that to change given the lack of top-line growth; most Canadian LPs are spending little to none on R&D, except Canopy, which underscores the consumer nature of their business model.

(Source: Public Filings)

In the last quarter, Aurora announced fiscal Q2 results including net revenue of $56 million. The recent trending of sliding revenue at Aurora reflects a deeper issue at the company that is losing ground in both Canada

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Cornerstone Investments profile picture
We are your best guide to cannabis investing. Read our 2021 Cannabis Sector Outlook here. We also provide in-depth industry analysis and coverage of 70+ cannabis stocks to help you get started.

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Comments (71)

They had talked about an equity raise. NOW would be the time to do it.
Every time I see comments yell “to the moon” the stock sinks, every time I see “it’s going to 0”, it surges up double digits
Seeing all these shorts, I’m starting to think it’s gonna reverse back up
The reverse stock split was nothing more than a Pump & Dump so the shorts could squeeze the longs for more. There’s not much interest in the shorts shorting a 50 cent stock. Just look at where this stock is heading...into bankruptcy!
Nothing like a good old fashioned short squeeze 😂
NES_WallStreetKid profile picture
Well, I just purchased a $5 put option today and now they are going up.
Did I ask you that?! Don’t care! Lol 😂
ACB better find a white knight before putz takes them private
It’s such a pos dropping everyday
Just over week and we should be at zero! What a great short!!
Say goodbye to ACB and hello to Cresco and Green Thumb Industries
Let see, another reverse stock by the end of this month! You can count on it!!!
Where is @Gary Bourgeault these days?
Why is the (formerly) pristine Swiss Central Bank loading up on shares of ACB I keep wondering .
Switzerland's Central Bank Bought Up Apple, GE, and Disney Stock. It Also Loaded Up on a Marijuana Stock. -- Barrons.com
BY Dow Jones & Company, Inc.
— 7:00 AM ET 05/11/2020
To quote: ...The bank also bought 1.8 million additional shares of
Aurora Cannabis to lift its investment to 4.2 million shares at the end of the first quarter.
Why ?
trustfun profile picture
nothing but dead money here- nelson putz a loss leader
JDrummer1 profile picture
Will be at zero in a few months.
fidel george profile picture
Better sell $ACB after this Reverse Split IMO and go heavy in $CNFA, one of the largest medical hemp company in the world with a massive hemp oil and hemp oil infused chewing gum products in the market.
EnterUserNameHere profile picture
So the bottom line is that this stock has been and is still currently a POS and will remain a loser for the foreseeable future. Good luck to all who are still in it, I guess at this point you may as well stick it out depending on when you opened your position.
Kevin Levss profile picture
What happened today?
Reverse split
NES_WallStreetKid profile picture
My biggest investment mistake!
toddu profile picture
bought 1000 shares last year mar28 - apr3 and held it for 7 days. sold it and made $34. i guess
i should feel grateful for that 34 cent gain.
415003 profile picture
You done good. Real good!
Couldn’t you wait till today??
It appears this company is going to Zero. Hopefully someone will buy it out to save it before it goes onto the ash heap of history.
stock realist profile picture
Stupid is as Stupid does....

Keep riding it down, girls !
stock realist profile picture
What a horrible co !

What a nightmare of a stock !
415003 profile picture
Reminds me of that Trump stock IPO back in the day.
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