ACB Stock Falls After Aurora Cannabis Files Prospectus Worth $750M

Aurora Stock

ACB stock closed Wednesday’s trading session down 1.43%, selling for $8.93 USD on the NYSE. The drop occurred after Aurora Cannabis (TSX:ACB) (NYSE:ACB), the second largest cannabis stock by market capitalization, filed a preliminary short-form base shelf prospectus with regulators from Canada and the US.

$750 Million Preliminary Prospectus

Once finalized, the registration statement and prospectus will allow Aurora Cannabis to issue stock offerings, subscription receipts, debt securities, and warrants worth $750 million for a period of 25 months. However, the prospectus does not mean that Aurora will offer any securities and the company clarified that if it does offer securities, it will do so with specific terms.

Aurora has a market cap of approximately USD $9 billion, and it recently overtook Tilray Inc (NASDAQ:TLRY) as the second largest cannabis company in the world, behind Canopy Growth (TSX:WEED) (NYSE:CGC).

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ACB stock is up 80% year-to-date, which is in line with broader industry stocks and its goal remains to achieve economies of scale like most cannabis companies. ACB stock is 30% away from its 52-week high of $12.52 on the NYSE.

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Expansion to Europe and Financial Outlook

The company has identified various expansion targets, and the acquisition of Padanios gives Aurora a cannabis distribution pipeline to pharmacies across Europe. European countries such as the UK have allowed the importation of medical cannabis, opening more market opportunities for Canadian cannabis companies.

Aurora is in a strong financial position. In December 2018, the company had an asset base of $4.875 billion with $575 million in liabilities. The net book value of Aurora is approximately $4.3 billion. The balance sheet at present represents a net book value of USD $4.3 billion or a multiple of 2.81X on current market prices. Aurora considers executing a profitability path in the next 2–3 years.

Revenue continues to grow, and in Q4 2018 the company reported $59.4 million in revenue. However, there were adverse headwinds in Q4 2018 including a $119.8 million loss on derivatives and a $69.9 million write-down as a result of impairment of investments.

At the time of writing, ACB stock is down 0.67% on the NYSE, selling for $8.87 USD. On the TSX, ACB stock is selling for $11.84 CAD, down 0.75%.

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