This week started off with the cannabis sector plunging into the red with double-digit losses for many large-cap stocks. Aurora Cannabis was among one of the biggest decliners in the market.
Last week Aurora Cannabis announced that it had provided notice to all holders of the company’s CAD$230 million 5% unsecured, convertible debentures (which are due March 9, 2020), that they have an opportunity to voluntarily convert their debentures at the Amended Early Conversion Ratio. So what does this actually mean?
In simple terms, this means that anyone who held debentures had the option to convert them into common shares on Monday, November 18, 2019. They will determine the amended early conversion ratio by giving a 6% discount to the VWAP (volume-weighted average selling price). By doing this, it causes further dilution of Aurora Cannabis’ share price.
This is a significant factor that drove Aurora Cannabis down so drastically but there was also other negative news that hit the headlines. On Monday it was announced that the Shall Law Firm and the Rosen Law Firm have both announced Investigations of Securities Claims Against Aurora Cannabis. They are encouraging investors with losses of over $100,000 to contact the firm.
Despite this unfavorable news, two analysts recently voiced their positive opinions about Aurora Cannabis which is why, as investors, we should not lose track of our long term perspective.
Cantor Fitzgerald analyst Pablo Zuanic actually upgraded the stock last week upgraded to overweight from neutral while raising his price target to $5.85 from $5.10. His reasons for the upgrade are as follows: “We do not expect a worse quarter for the group” Aurora looks as if it’s in better shape than its competitors, the company shows a strong understanding of the market, and the updates announced Thursday afternoon were “more decisive actions” than rivals are making. It seems as if Aurora Cannabis is committed to survival during these tou times which many companies may have a hard time doing. Pablo also stated “Kudos for the timeliness and depth of disclosure (ACB - Get Rating)
ACB shares were unchanged in after-hours trading Tuesday. Year-to-date, ACB has declined -52.82%, versus a 26.55% 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...