Aurora stock is the biggest loser in the cannabis sector after Aurora Cannabis Inc (TSX:ACB) (NYSE:ACB) reported lower than estimated revenue for its fiscal 2020 first quarter. Moreover, the company said it planned to halt construction at one of its weed-growing facilities in Denmark.
For much of the year so far, the cannabis industry has gone through pretty tough times, and many of the bigger players in this space have borne the brunt of the situation. Aurora Cannabis, which is one of the biggest cannabis companies in the world, released its financial results for its first quarter. At the same time, Aurora also made an important announcement with regard to its business operations.
The company’s revenue for the period stood at $75.3 million CAD, which represented a fall of as much as 24% from the previous quarter. Due to the declining sales, Aurora Cannabis also announced that it is going to pause the expansion of its production facilities in Canada and Denmark.
Over the course of the year, oversupply has been an issue in the industry, and the problem has been blamed on the slower rollout of retail outlets by the regulators in Canada.
The Q1 figures proved to be disappointing, and Aurora stock crashed by as much as 15% to $2.80 on the NYSE after the announcement.
Aurora generated a net income of $12.8 CAD million, which worked out to $0.01 a share. In the prior-year period, it had generated a net income of $105.5 CAD million, which worked out to $0.12 a share.
On the other hand, the Chief Executive Officer of Aurora, Terry Booth, mentioned that the company had held back some of its produce during the quarter in anticipation of ‘legalization 2.0’ in Canada. Considering the fact that the derivatives market could fetch a higher value, it is perhaps a sound move, although it took a toll on the company’s performance in this quarter.
The rollout of derivatives is going to take place at the end of the year in Canada, and it promises to be the next big opportunity for the cannabis sector. It remains to be seen how the company performs once that happens.
Aurora stock has lost 45% so far in 2019.
Featured image: Canva