Last week promotions Aurora Cannabis (NYSE:ACB) (TSX:ACB) lost 4,58%, closing last Friday at the level $4,04 (C$5,84). But this is only part of the whole story..
Canadian Cannabis Producer Shares Show Increased Volatility Last Week, having lost last wednesday 14,5% to the mark $3,85 (C$5,12), and then strengthened again. Yesterday they headed down again, throwing off 6,59% to $4,11 (C$5,47).
Last week's growth was driven by fresh information about the company's global operations and initiatives to sustain growth, published on Thursday. CEO Terry Booth said:
«Aurora takes its leading position in the global cannabis industry seriously and strives to be open to all stakeholders. ".
"Team Aurora works to promote a number of major strategic initiatives in Canada, USA and abroad, aimed at further strengthening the company's global position ".
The updated report provided a snapshot of the latest moves by the cannabis giant, especially regarding the current expansion in western Canada and Denmark, as well as overviews of activities in Quebec, Ontario, USA, Lithuania, Latvia, Estonia and Latin America. It also released information on deals and agreements for exports to the UK., Poland and Australia.
Aurora is currently working in 25 countries of the world.
It can be assumed, that the report was a response to the fall in stocks, which in the period from 11 September to 2 October lost 37,7% (dropping from $6,49 to $3,85). And this step, undoubtedly, helped: stocks immediately reversed and reached $4,51 (C$6,01).
Has the situation changed?
The main factor, behind the weakness of stocks, hasn't gone anywhere. And this factor was the weak financial results for the fourth quarter.
Firstly, they fell short of analysts' expectations, but, maybe, more important was, that the company was unable to implement its own revised forecast, which was lowered again. And since the company plans to publish its report for the next quarter within a month, investors will closely monitor the results.
but, considering the large-scale development project of Aurora, shareholders can also pay attention to another key indicator - debt burden. Or rather, compare this figure with other players in the sector.
Debt load will only grow
Aurora has a net debt of about 250 million US dollars. And this is not surprising, given the long list of current company initiatives.
Work continues on several projects, including: Aurora Sun facility with area 1,6 million square feet in Medicine Hut (Canada); object Nordic Sky area 1 million square feet in Odense (Denmark); construction of a complex in Whistler (Columbia region) and innovation center in Comox (British columbia). Opening of the new headquarters of the Anandia Laboratorie subsidiary (company test site) in Vancouver scheduled for today.
Given these programs, we can safely expect an increase in the debt burden. For comparison, other large companies in this sector, such as Canopy Growth (NYSE:CGC) (TSX:WEED) and based in Quebec Hexo (NYSE:HEXO) (TSX:HEXO), have cash on their balance sheet.
Investors Demand Growth in Revenue from All Cannabis Producers, but the pressure on Aurora will be especially strong, given its debt burden. The company will publish its next income statement 11 november.
Resignation of the CFO HEXO
The Chief Financial Officer of Quebec-based cannabis producer HEXO Corp announced his immediate resignation last Friday., after working only four months.
In its a statement Michael Monahan stated, what is retiring, since he has to spend most of his time in the metropolitan area to work, that “it is currently impossible, considering the needs of his family ".
Stocks reacted to the news with a decline of more than 6%.
Stephen Burvasz, VP of Strategic Affairs, will replace Monahan in this position.
