Aurora Cannabis (TSX:ACB) (NYSE:ACB) may be the second biggest cannabis producer in the industry, but over the past twelve months, Aurora stock has collapsed dramatically.
Although ACB stock has managed to recover somewhat in recent days, it is still down by as much as 77% over the past 12 months. The stock is now trading at near historic lows, so it is worthwhile looking closer at what's going on.
Disappointing Earnings: Reason to Worry?
The company’s performance in the fiscal second quarter proved to be a disappointment, as its revenue grew by only 3% year-on-year. By contrast, in the same quarter last year, Aurora managed to more than double its revenue.
Aurora Cannabis has stated that its revenue growth might continue to be weak in the next quarter as well. There are also widespread concerns with the fact that the company might not become profitable any time soon. That, coupled with weak revenue growth, it's no wonder many investors seem concerned.
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At the time of writing, Aurora stock is down by 1.78% at $1.66.
It is also important to point out that Aurora’s production growth went down in the quarter as well. From the previous quarter, it declined by as much as 26%. The company expects to produce 150,000 kilos in 2020.
Launch of Vapes and Cannabis Edibles
Despite this gloomy situation, it should be noted that the launch of vapes and cannabis edibles could potentially recharge Aurora’s growth trajectory significantly.
While it is true that the recent volatility in Aurora stock might have been beneficial to traders, many investors still seem hesitant.
For investors, Aurora stock is still a pretty risky proposition for a number of reasons, and on top of that, Aurora Cannabis is currently facing a wide range of challenges. The continued presence of the black market will also put pressure on the company’s growth.
What do you think?
Featured image: Canva
