Cannabis Watch: Aurora Cannabis stock jumps as pot sales grow faster than expected

Cannabis Watch: Aurora Cannabis stock jumps as pot sales grow faster than expected

15 May    Finance News

Aurora Cannabis Inc.’s pot sales jumped as COVID-19 spread across the globe in the first three months of the year, and the company’s beleaguered and recently bundled shares received a jolt in after-hours trading Thursday.

When Aurora reported results, the company didn’t supply a net loss figure, but it was included in Canadian securities filings. In the filings, Aurora ACB, +14.48% ACB, +10.97% reported a net loss of C$137.4 million, which amounts to C$1.37 a share, widening from C$160.2 million, or C$1.89 a share, in the year-ago period. Aurora reported losing C$1.43 billion in the nine months that ended in March.

The Alberta-based weed company said third-quarter revenue, after subtracting excise taxes, rose to C$75.5 million from C$65.1 million in the year-ago quarter and C$56 million in the preceding quarter, with sales of recreational marijuana totalling C$41.5 million and medical pot C$31.9 million.

Analysts polled by FactSet had predicted revenue of C$66.7 million and a net loss of 77 cents a share.

In the earnings call, Aurora executives said that the company observed some consumer stockpiling in March as the coronavirus pandemic spread across the world — but the company also experienced a surge in sales of the brand of cheap pot called “Daily Special” it recently launched. The March gains, however tapered off in April and provincial buyers returned to pre-pandemic levels.

Aurora shares jumped about 16.7% in the extended session immediately after the results were released, following a 15.5% gain to $6.64 in the regular session. The stock has lost 75% of its value this year, as the Cannabis ETF THCX, +2.50% , which tracks a basket of pot stocks, has fallen 35%.

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The company said that the COVID-19 pandemic did not have a significant impact in the third quarter, as cannabis production has been recognized as an essential service in Canada and Europe. Interim Chief Executive Michael Singer said in the conference call Thursday that it’s likely that the coronavirus will have a greater effect on the company’s results in the fiscal fourth quarter.

Singer said that Aurora it was “pleased” with the progress it had made to reduce its selling, general and administrative expenses to $C40 million to C$45 million by the end of the fourth quarter. The company has also said it would reduce its capital expenditures below C$100 million for the second half of fiscal 2020.

The cheap weed Aurora is selling has begun to impact the average price it achieves per gram for consumer product, falling to C$4.33 during the quarter, compared with C$4.76 a ear ago.

Aurora completed a 12-for-1 share consolidation Monday, in response to a delisting threat from the New York Stock Exchange after its stock traded below $1. The move reduced its float from more than 1 billion shares to roughly 100 million shares.

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Aurora also announced that it planned to sell small batches of stock at market prices in order to raise money. The company has struggled to maintain a cash-rich balance sheet that rivals such as Canopy Growth Corp. CGC, +2.21% WEED, +1.99% and Cronos Group Inc. CRON, +2.06% CRON, +1.31% boast.

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The company’s share price has tumbled as it failed to hit promised profit targets. Aurora jettisoned several top executives who had been with the company since close to its inception, leading to Singer taking over as interim CEO.

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