This week marked another volatile week for the cannabis sector. The indexes plunged in the first few trading sessions of the week as Fed Chairman Jerome Powell suggested that the economy would have a long road to recovery. This put a damper on the current optimism that investors were having with this current stock market rally.
On Monday Aurora Cannabis (ACB) went through with their 12:1 reverse stock split that effectively consolidated their shares. ACB had a ballooning share count of well over 1 billion shares as dilution plagued the company for years. ACB lost over 30% of its value soon after the reverse split took place as investors continued to bail and lose confidence. Luckily the company posted solid numbers on Thursday which offered some support for the entire sector.
Aurora Cannabis (ACB) reports a good third quarter, shares jump
Despite starting the week off on an extremely negative note, ACB was able to stage an impressive rally on Friday. The company announced a 12:1 reverse stock split on Monday which sank shares another 30%. However, on Thursday evening, ACB reported quarterly earnings and shares skyrocketed 67% on Friday. ACB posted solid numbers this quarter. Revenues jumped 35% to $75.5 million as operating costs dropped. Many investors were expecting ACB to have a flat quarter with little to no revenue growth so these results were taken positively. ACB still has a long road ahead of them if they want a chance at recovering but this is one step in the right direction. ACB shareholders will also eagerly wait as the company announced that a new CEO should be in place “within a few months”. We consider the new CEO an important next step for the company and it could add momentum behind the recent move higher.
GW Pharmaceuticals (GWPH) posts a solid quarter
GWPH posted a solid quarter with their epilepsy durg Epidiolex sales topping $120 million in their most recent quarter. GWPH has been consistently growing its revenues and shares jumped substantially on their positive earnings. We look forward to seeing how GWPH can continue to grow its Epidiolex sales numbers as they start to sell across Europe later into 2020. The company sells its flagship drug Epidiolex in the United States and European markets which so far has had tremendous success.
Tilray (TLRY) disappoints on earnings again
TLRY disappointed investors yet again as the company reported a net loss of $184.1 million, or $1.73 a share, compared to a loss of $29.4 million, or $0.31, for the first quarter 2019. Although quarterly revenue increased 126% to $52.1 million the company is having difficulty reducing their cash burn. To put it into perspective, analysts were expecting the company to report a GAAP net loss of $0.44 a share on revenue of $49.5 million. Shares of TLRY had been on a run recently and many investors right now question if the company will be able to hold on to their gains after reporting such a disappointing quarter. TLRY needs to get its operating expenses under control if they stand a chance at profitability in the future.
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ACB shares were trading at $10.71 per share on Friday afternoon, up $4.07 (+61.30%). Year-to-date, ACB has declined -58.68%, versus a -11.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
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