Aurora Stock Set for Further Losses Ahead of Earnings

Aurora stock

Aurora stock looks set to extend its fall as Aurora Cannabis (TSX:ACB) (NYSE:ACB) prepares to release its Q2 earnings on Thursday following the bombshell news that it was to layoff approximately 500 staff and ring in a host of executive-level changes in an effort to generate a path to profitability.

Aurora Stock Leads Market Losses

Aurora Cannabis sparked a bloodbath in pot stock losses last week after the second-biggest cannabis company on the Canadian market said it was slashing its workforce by around 500 people, or 20% of its total headcount, in a major restructuring effort as the cash-strapped firm looks to lay out a solid plan to turn profitable. The company also announced the retirement of its co-founder and long-time CEO Terry Booth, who had been at the helm for over 700 years and led Aurora through the entire cannabis legalization process in Canada.

Since the announcement was made after hours last Thursday, Aurora stock has dropped 30% to $2.00, its lowest valuation since October 2016, but the bottom appears nowhere in sight as the company prepares to release its second-quarter fiscal 2020 results this week. As per last week's announcement, it is already expected that Aurora Cannabis will register a C$1 billion impairment charge in those earnings as a result of write-downs of C$740 million to C$775 million in goodwill as well as C$190 million to C$225 million worth of intangible property, plant, and equipment charges.

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Earnings Expectation

In a call to investors last week, Aurora's Chief Financial Officer, Glenn Ibbott, said that the write-downs were related to the company's ongoing operations in South America and Denmark and that its core Canadian assets weren't affected. The company also expects to record a C$12 million write-off as a result of product returns and price reductions incurred in the first half of 2019.

According to FactSet, analysts expect Aurora Cannabis to report revenue of C$61.7 million, versus C$54.2 million reported a year ago. But the company’s second-quarter sales are expected to decline sequentially from first-quarter revenue of C$75.2 million. With Aurora stock at its lowest post-legalization value, is there any way back for the industry heavyweight?

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