Aurora Cannabis Inc (TSX:ACB) (NYSE:ACB) posted weaker than expected quarterly results yesterday, causing Aurora stock to drop over 8%.
Aurora Stock Hampered By Walk Back on Profitability
The world's second-largest pot company reported $98.9 million CAD in revenue for the period ended June 30, which is an increase of 52% from the previous quarter and 416% year-on-year, while net sales grew 61% to $94.6 million CAD. While this is still an impressive increase, analysts had expected Aurora to post sales of $108.3 million CAD as per the company's earnings preview in July, which has been a driving factor in the decline in value of Aurora stock today.
Despite some positive figures, Aurora stock was hampered by the company's walk back on its forecasts of profitability in 2019, pushing that goal to next year. Earlier this year, Aurora Cannabis management predicted positive EBITDA for its fiscal fourth quarter; however, this time frame for profitability was omitted from July's earnings preview, simply stating that the company was "on track" to achieve this goal in the future.
Some Hope for Aurora Stock
Chief Financial Officer Glen Ibbott offered some hope for investors in Aurora stock, saying "Aurora's diversified product portfolio remains in demand with patients and consumers alike. With the Canadian launch of derivative products in the coming months, we have made the necessary investments to ensure readiness and focus on a variety of value-added products." Meanwhile, Executive Chairman Michael Singer cited a poor roll-out of retail stores as the reason for the missed earnings, and that he was "very confident" Aurora will become profitable next year.
Other positive takeaways for Aurora stock include the declining cost of production per gram, which dropped 20% in the fiscal fourth quarter. Cannabis production rose 86% from the previous quarter to nearly 30,000 kilograms, bringing the company's operating facilities' annualized run rate to in excess of 150,000 kilograms. Last week, Aurora announced the sale of its remaining shares in The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) at an approximate 50% rate of return; however, this bit of news also had Aurora shares in the red, trading down about 4% at the time.
While the company looks positively towards 2020 to eventually turn a profit, and these efforts should be boosted by legalization 2.0, investors are clearly disappointed with the missed projections as Aurora stock trades at $7.83, a decline of nearly 50% since legalization last October. So, the question remains, will Aurora Cannabis be able to follow through on its forecasts and turn a profit next year?
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