Aurora Stock Recovering Slightly Following Earnings Miss

Aurora stock

Aurora stock is recovering slightly on Tuesday following last week’s disappointing quarterly results and news that Aurora Cannabis (TSX:ACB) (NYSE:ACB) was halting production at its Aurora Nordic 2 facility in Denmark to save about $80 million CAD over the next year, as well as indefinitely deferring the completion of its Aurora Sun facility in Medicine Hat, Alberta.

Aurora Stock Hits Two-Year Low on Earnings Disappointment

Aurora stock slumped to its lowest point in nearly two years last week after the company posted revenue of $75.3 million CAD, which fell 24% from the previous quarter. Net income was just $12.8 million CAD, which represented earnings per share of $0.01, a sharp drop from the same period last year in which the company generated earnings of $105.5 million CAD or $0.12 per share.

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Halted Construction

To add further misery to Aurora shares and its investors, the company also said that it would be halting production at its Nordic 2 facility in Denmark and delaying the completion at its Aurora Sun plant in Alberta. However, investors can take some optimism in comments made by the Mayor of Medicine Hat, Ted Clugston, who said after a meeting with Aurora Cannabis executives, “It maybe came across that they were shutting right down, no construction, and you wouldn’t see anybody on site. That’s kind of how I visualized it. But that’s not the truth.”

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Convertible Debenture Driving Gains in Aurora Stock

The gains in Aurora stock today are most likely driven by news that 94% of holders of Aurora’s $230 million CAD unsecured convertible debt that matures in March have chosen to convert their debt into stock. As a result, approximately $216 million CAD of debt will be converted into stock, which will allow the firm to focus on its cash position after last week’s earnings made it apparent that Aurora Cannabis would not have been able to pay off the total sum when the debentures matured in March.

Aurora shares are currently trading for $3.11 in Toronto, up 3.6%.

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