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.

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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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