Many believed that 2019 was going to be the year in which the cannabis sector was going to deliver on the expectations of investors. However, it became clear pretty quickly that this would not be the case after a range of issues affected some of the biggest companies and resulted in massive declines in stock prices. Aurora Cannabis (TSX:ACB) (NYSE:ACB), one of the biggest cannabis in the world, was no exception to this, and Aurora stock fell almost 80% from its highest level back in March 2019.
Will 2020 be any better for the company?
Business Progress
On paper, Aurora Cannabis seems the likely player to continue dominating in the cannabis industry. At this point in time, it has 15 cultivation facilities, and at its peak, the company can produce 700,000 kilos of marijuana a year. Such production levels can help Aurora in bringing down its costs considerably.
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It has also managed to set up a considerable footprint in the international market and has a presence in as many as 24 countries. There is also speculation that the company could sign a partnership with a big-ticket food or beverage firm.
Aurora stock is down 4.50% at $1.92 in the morning session on Monday.
On the Other Hand...
If one looks deeper, then things start to unravel fairly quickly. Like the rest of the industry, Aurora Cannabis is also suffering from oversupply, and due to the slow rollout of stores in Ontario, the company is struggling considerably. Its product is not reaching the end consumer easily, and that is unlikely to change this year.
The company has also been losing a lot of money in its operations, and experts believe that this is not going to change any time soon.
Last but not least, despite having $400 million CAD worth of at-the-market offerings and a $300 million CAD credit line, Aurora’s cash position is far from healthy.
What do you think of Aurora stock after the recent slump? Share your views.
Featured image: Canva
