Trading on the New York Stock exchange, Aurora Cannabis stocks (NYSE: ACB) rallied rom October to November on the back of the U.S. election results as well as other pro-marijuana changes both locally and internationally. However, beyond that, it is currently one of the worst-performing marijuana stocks available.
As of the close of trade on December 17th, Aurora Cannabis Stocks’ 2020 value was down by 63%. This is certainly a major concern for cannabis stock investors as well as the company itself. The following explores some of the key challenges this marijuana stock has had in 2020, its performance highlights so far, and some insights into what 2021 holds for this cannabis company.
Key challenges for Aurora Cannabis stocks in 2020
Here are some of the key challenges that have influenced Aurora Cannabis’ stock performance this year.
Issues surrounding supply bottlenecks in various Canadian districts have ultimately hindered Aurora Cannabis stock’s growth in recent times. This has led many to conclude that there is no path to profitability for this top marijuana grower anytime soon.
Strength of the black market
Despite legalizing marijuana in Canada and across many U.S. states since 2018, the underground or black market continues to thrive. Strenuous regulations have led to a limited number of dispensaries available, consequently strengthening the black market. While this is an issue that continues to plague the entire industry, it is certainly a contributing factor to Aurora Cannabis’ woes on the stock market.
Business strategy and rising debt concerns
Generally, Aurora Cannabis is well positioned yet poorly run company. Its access to markets in 25 countries and an overall push to become the world’s largest marijuana producer should ideally attract potential investors. However, things haven’t exactly gone according to plans. Revenue continues to fall and this marijuana grower’s focus on international markets may not yield returns until there’s widespread legalization.
It’s worth noting that Aurora Cannabis continues to take reasonable steps to turn its fortunes around. For instance, it is currently closing some of its smaller outlets to cut costs. It has also suspended the development of a one million square foot facility in Denmark.
In response to its dwindling revenues, Aurora Cannabis is also refocusing on gaining market share in Canada and rebranding to deliver high margin products. Delivering high-value products is also a countermeasure for dealing with competition from the black market.
Highlights of Aurora Cannabis stocks financial standing
Before highlighting its current financial standing, it’s important to point out that this weed stock company recently released its Q1 2021 results to the pleasure of analysts. The results paint a positive picture of what’s to come in 2021 for the marijuana grower. For instance, their CBD is ranked number one by Nielsen in the U.S. CBD sector. Their international medical marijuana business also grew its revenue by 40% in the same quarter.
Here are some highlights of how Aurora Cannabis stock currently stand financially:
- Current stock price (close of trade 18th December 2020): $9.60
- Market Cap: $1.697 Billion
- Enterprise value (MRQ): $811.933 Million
- Total debt (MRQ: $379.596 Million
- Total assets (MRQ): $2.064 Billion
- Total revenue (last financial year): 204.777M
The bottom line: What does 2021 hold for Aurora Cannabis stocks?
Like its investors, Aurora Cannabis will be eager to get into 2021. The rally experienced in November may have helped to cushion some of the losses it experienced on the stock market, but the journey towards profitability still has a long way to go.
Until it can address issues related to its falling revenues, drop in sales, bottom-line losses, and negative cash flow, Aurora Cannabis stock will be less attractive to investors. Notwithstanding, this is still a strong cannabis stock from a top marijuana company. It’s certainly one to watch for 2021.