In September, Aurora Cannabis released details about their upcoming annual general meeting of shareholders, that will occur on Friday, November 8th, at 10 AM MT. Many issues will be discussed during the meeting including their recent quarter, that fell short of expectations, and when exactly management expects them to be profitable. Investors will be looking for further guidance on some very important topics but the question on everyone’s mind is will the company be able to re-instill investor confidence in the cannabis sector?
Many issues persist for Aurora Cannabis, like the massive amount of goodwill on their balance sheet (over 3 billion to be exact or 58% of their market cap) and when will they start to realize international revenues. Aurora Cannabis boasts a presence in 25 countries across the world but it is not yet pulling in revenue from their international segments and investors would also like to see more clarity on that topic.
Also, they have the Canadian recreational and medical markets to address. With the government still bottlenecking the industry when it comes to physical retail shops and dispensaries, it will be interesting to hear what management has to say on that topic and how they plan to combat that problem that persists within the market today.
Right now I believe management’s top priority is re-instilling confidence for long term shareholders and sending the message that they are focused on actually being profitable, while at the same time continuing their global expansion efforts.
The market environment has dramatically changed and although market share nowadays in the cannabis sector can easily be stolen for a company that has lots of cash, the number of companies that actually have the cash to spend is drastically shrinking along with their share prices. Companies need to change with the market environment and, like any sector, it has its ups and downs.
Regarding their shareholder meeting on Friday, the market will inevitably tell us whether or not they are pleased with Aurora Cannabis’s transparency and communication (watch to see how the stock is trading).
While Aurora Cannabis does have its issues like any company, I feel confident in the company for the long-term, as they have cemented themselves as an industry leader in the cannabis sector. Let’s not forget about Aurora Cannabis’s massive production capacity and cost of production that should propel the company to profitability once all of their distribution channels are firing on all cylinders. I believe that if they position themselves right, they will dominate the sector, especially after we see consolidation in the form of bankruptcies and M&A activity.
(Disclosure: The author owns shares of Aurora Cannabis)
ACB shares were trading at $3.81 per share on Tuesday afternoon, up $0.21 (+5.83%). Year-to-date, ACB has declined -23.19%, versus a 24.51% 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...