Aurora stock closed at $6.25 USD yesterday. At present, shares on down a further 1.84% on the NYSE. Cannabis's second-largest company by market cap is having a rough July; shares have lost 18.09% over the past month "lagging the Medical sector's loss of 2.37% and the S&P 500's gain of 2.62% in that time."
It's not looking very appealing for ACB investors. But its the wrong time for shares to be tanking as the company approaches its next earnings release.
Aurora Stock Expectations
According to Yahoo Finance, analysts are expecting Aurora Cannabis (TSX:ACB) (NYSE:ACB) to post earnings of -$0.02 per share. If so, this marks a year-over-year decline of 115.38%. However, the publication reports a recent "consensus estimate" that calls for "quarterly revenue of $86.93 million, up 485.8% from the year-ago period."
So what's gone wrong for Aurora stock in 2019?
One of the reasons ACB continues to fade—dropping nearly 40% from March highs—is a looming balance sheet problem. There is a large debt maturing in a little over seven months, and this is most likely maintaining pressure on Aurora stock.
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The company closed the offering of its sixth convertible debenture on March 9, 2018. It raised $230 million CAD. Its offering has led to a conundrum, as Investorplace states:
"[U]nless ACB stock rises 70% in maybe six months — giving lenders time to respond, as well as confidence that the stock won’t pull back as many pot stocks have on occasion — Aurora Cannabis is going to have to pay back $230 million CAD in cash on March 9th."
The sector-wide weakness is also adding to Aurora stock pressure, but there's no doubt that "the convertible maturity is becoming a factor as well."
We know Aurora's debt is an issue to contend with; Bank of America Merrill Lynch (NYSE:BAC) highlighted the debenture when it downgraded Aurora stock this month.
As Aurora stock price lowers, the likelihood of the company issuing even more shares at an even lower price is probable. Investors may be biding their time on this until they know what's happening next.
Aurora stock is still up 25% for the year, and this worth noting; however, the more recent trend is sharply negative.
What are your thoughts on this cannabis giant?
Featured Image: Canva
