Aurora cannabis stock tanks as company plans to raise $500 million

Aurora Cannabis Stock Down more than 80 Percent in Year to Date Performance

Aurora Cannabis (NYSE:ACB) investors are in for a bearish ride. This comes after Aurora Cannabis stock went down more than 6% on Tuesday.

Aurora Cannabis stock price today plunges

The Canadian-based firm, which holds a cannabis producer license, trades on both the Toronto Stock Exchange and New York Stock Exchange under the same ticker symbol.

According to TradingView data, Aurora briefly traded at $4.40 before the price plunged to $4.07, signaling a drop of roughly 8.1%.

Aurora Cannabis stocks down more than 6% on Tuesday
Aurora Cannabis stocks down more than 6% on Tuesday. | Credit / Trading View

Aurora downgraded from overweight to neutral

Pablo Zuanic, an analyst at New York-headquartered financial services firm Cantor Fitzgerald, downgraded Aurora from Overweight to Neutral.

Aurora is down to C$7 from C$18. Zuanic put the blame squarely on the company after disclosing that it had burned through “what was left of the $183 million equity facility in the last 30 days,” which is contrary to expectations and guidance, TheFly reported.

The analyst further added that the company will likely fail to benefit from potential regulatory changes in the United States.

Potential regulatory changes ahead

Analysts are optimistic that a win for the Democrats in the November 3rd election is bullish for pot stocks.

Presidential nominee Joe Biden is pushing for cannabis research before federal legalization. Zuanic predicts that a White House win for Biden and a sweep of the Senate by the Democrats could potentially herald bullish momentum for cannabis stocks.

However, Aurora’s balance sheets woes could prevent it from capitalizing on the possible regulatory changes in the world’s leading economy.

Aurora to raise $500 million in 2 years

In a press statement published on October 27th, the company announced the filing of a preliminary short-form base shelf prospectus with the intention of raising $500 million over a 2-year period.

Aurora Cannabis filed the prospectus with the U.S. Securities and Exchange Commission and Canadian securities regulators in all provinces except Quebec.

Aurora is aiming to raise the targeted $500 million by offering common shares, preferred shared, debt securities, warrants and subscription receipts.

Aurora to boost its treasury

The company filed the prospectus to boost its coffers and have the “financial flexibility to move forward.

Aurora currently has cash reserves of $272 million after completing its at-the-market (ATM) program.

“With the completion of the previously filed ATM program, the Company currently has available cash resources of approximately $272 million, in addition of undrawn revolver capacity of approximately $11 million.”

Aurora Cannabis stock news: Ends 2020 with a CA$3.3 billion net loss

2020 has not been a good financial year for the cannabis producer, which after a series of losses, has relinquished its top position in Canada’s consumer cannabis market, admitted the company’s CEO Miguel Martin.

Terry Booth, the co-founder of the company stepped down as the chief executive in February 2020. He was replaced by executive chairman Michael Singer

The cannabis producer ended its 2020 fiscal year with losses totaling CA$3.3 billion ($2.5 billion at the time of writing). This came after the company reported a loss of $1.4 billion in the fourth quarter.

The company financials do not seem to be in good shape. Aurora’s recorded a revenue of CA$72.1 million in the quarter ending June 30, a drop of 4.5% from the previous quarter.

Aurora Cannabis, which owns several subsidiaries, laid off thousands of employees early this year to cut costs.

Aurora Cannabis stock 2020 performance

The Aurora Cannabis stock year-to-date (YTD) performance indicates how the company has struggled throughout the year.

Each share of the company exchanged hands for more than $25 at the beginning of the year but has dropped to just over $4.

The stock is down roughly 84% since the beginning of the year.