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37300.0 | 2020-09-09 00:00:00 UTC | Aurora Cannabis: Should Contrarian Investors Buy ACB Stock In September? | ACB | https://www.nasdaq.com/articles/aurora-cannabis%3A-should-contrarian-investors-buy-acb-stock-in-september-2020-09-09 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Following a dismal 2019, many pot stocks including Aurora Cannabis (NYSE:ACB) stock have continued to trade near all-time lows this year, too. So far in 2020, ACB stock is down over 70%, hovering at $7.8. Despite this decline, the daily trading volume of ACB stock remains strong.
Source: Shutterstock
Last week saw volatility in broader markets increase and profit-taking kick in. As a result, many stock that have gone up in recent weeks gave back some of their gains. So what should investors in ACB stock do in September? The company is expected to report Q4 FY20 earnings on Sept. 15. If you’re not currently a shareholder, you may want to wait to commit fresh capital into Aurora Cannabis. Analyzing the upcoming results may be more prudent before hitting the “buy” button. Here’s why.
Industry Headwinds Continue
Cannabis stock investors would like to return to the rosy days of 2018. Yet for most popular pot shares, including ACB stock, lasting stability could still be a distant dream.
7 Upcoming IPOs for the Second Half of 2020
According to recent research by Oludamola Durodola and Deepika Chotee of Lakeland College, Canada, “11 per cent of Canadian youths and adult consume approximately 700 tons of cannabis annually.” Over the past several years, Canada has had a large number of players enter the legalized marijuana market because of its growth potential.
However, as early as 2019, hope was replaced by reality. Slower than expected growth, regulatory hurdles, and high rates of cash burn have become nightmares for most of these companies. In addition to an oversupply in the market, the relentless strength of the black market is an important issue.
One of the most important points to remember is that cannabis is an agricultural commodity, affected by demand and supply issues. Due to regulatory reasons, these Canada-based pot producers cannot supply to recreational pot users outside Canada — a fact that is not likely to change any time soon. Also, medical cannabis sales worldwide are also limited. Therefore, company valuations should and will ultimately be based on actual demand and supply parameters.
Durodola and Chotee further highlight, “Cannabis stocks on average possess higher level of risk when compared with growth and speculative stocks on the TSX.” In fact, shares on Aurora, one of Canada’s largest producers, is a testament to the volatility in prices.
Aurora Is Not Yet Profitable
How can a producer like Aurora Cannabis maintain high margins in an industry that does not have a meaningful growth potential?
Aurora’s management has set itself a target of margin improvement as well as turning the company EBITDA positive by the end of the year. In 2020, interim CEO Michael Singer put his mark on a number of spending cuts, including lay-offs and decrease in capital spending. Q3 results showed an improved balance sheet compared to the previous quarter.
With some further cost-cutting measures management will possibly come close to becoming EBITDA positive. But becoming profitable could still take many quarters, if not years. Like many other cannabis producers — such as Canopy Growth (NYSE:CGC) or Tilray (NASDAQ:TLRY) — Aurora Cannabis stock has so far not been able to convert the revenue growth into real profits.
Also most pot stocks have been burning through loads of cash and losing money like there’s no tomorrow. The company used 154.5 million CAD in its fiscal third quarter, down from 273 million CAD in the previous quarter. Although it is a considerable YoY improvement, that amount is still high for a company with a market capitalization (cap) of about $900 million. Furthermore, its total debt from borrowing is close to 250 million CAD, another high amount that may mean financial headache in the quarters aheads.
Cash flows are also far from predictable. Price weakness in most pot shares including ACB has improved relative valuations, but these stocks aren’t necessarily cheap yet. Unless Aurora Cannabis stock improves profitability metrics, I’d be skeptical of any up move in price.
The Bottom Line on ACB Stock
2019 and 2020 can be summarized as catastrophic for the price of most cannabis shares including ACB stock. The industry is in now in a multi-year down trend.
Behind the underperformance of Aurora stock over the past two years are important fundamental issues. They include lower-than-expected demand for cannabis-derived products, a strong black market, and high operating losses.
The company is expected report earnings in the coming days. Investors would like to see a stronger balance sheet and fundamental metrics that would give inspire confidence in management’s long-term ability to operate as an efficient entity. Otherwise, they may continue to hit the sell button.
I’d not yet be willing to buy ACB stock. On a final note, 2021 may become the year of industry-wide mergers and acquisitions in the cannabis space. If Aurora becomes a target for acquisition, then shareholders could be well rewarded.
On the date of publication, Tezcan Gecgil did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The author has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. She also publishes educational articles on long-term investing.
The post Aurora Cannabis: Should Contrarian Investors Buy ACB Stock In September? appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Price weakness in most pot shares including ACB has improved relative valuations, but these stocks aren’t necessarily cheap yet. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Following a dismal 2019, many pot stocks including Aurora Cannabis (NYSE:ACB) stock have continued to trade near all-time lows this year, too. So far in 2020, ACB stock is down over 70%, hovering at $7.8. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Following a dismal 2019, many pot stocks including Aurora Cannabis (NYSE:ACB) stock have continued to trade near all-time lows this year, too. So far in 2020, ACB stock is down over 70%, hovering at $7.8. Despite this decline, the daily trading volume of ACB stock remains strong. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Following a dismal 2019, many pot stocks including Aurora Cannabis (NYSE:ACB) stock have continued to trade near all-time lows this year, too. The Bottom Line on ACB Stock 2019 and 2020 can be summarized as catastrophic for the price of most cannabis shares including ACB stock. So far in 2020, ACB stock is down over 70%, hovering at $7.8. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Following a dismal 2019, many pot stocks including Aurora Cannabis (NYSE:ACB) stock have continued to trade near all-time lows this year, too. So far in 2020, ACB stock is down over 70%, hovering at $7.8. Despite this decline, the daily trading volume of ACB stock remains strong. |
37301.0 | 2020-09-09 00:00:00 UTC | What to Like -- and Loathe -- About Aurora Cannabis' Latest Update | ACB | https://www.nasdaq.com/articles/what-to-like-and-loathe-about-aurora-cannabis-latest-update-2020-09-09 | nan | nan | You probably expected that Aurora Cannabis (NYSE: ACB) would have announced its fiscal 2020 fourth-quarter results by now. After all, it's been nearly four months since the Canadian cannabis producer reported its fiscal Q3 results. However, Aurora's Q4 results won't be officially announced until Sept. 22.
But on Tuesday, the company did provide a sneak peek at some of its forthcoming results. Here's what to like -- and what to loathe -- in Aurora's latest business update.
Image source: Getty Images.
What to like
Unfortunately, there wasn't much to like in Aurora's business update. Arguably the most important positive for the company was that it reached an agreement with banks to amend its secured credit agreement. These changes include:
Adjusting the total funded debt-to-equity covenant to 0.28:1 for fiscal 2020 Q4 and fiscal 2021 Q1
Reducing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) milestones for the trailing 12-month period ending June 30, 2021, to 20 million in Canadian dollars from CA$51 million
Reducing the size of the company's revolving credit facility to CA$15 million from CA$43 million
These amendments are good for Aurora because they increase the company's already limited financial flexibility. The reduction in the revolving facility also helps Aurora reduce fees.
Another bright spot in Aurora's business update was that the company said it's now operating at a quarterly sales, general, and administrative (SG&A) expense run rate in the low CA$40 million range. That's a significant improvement from the company's fiscal 2020 Q3 results. Aurora also stated that it expects further cost reductions of up to CA$10 million per quarter beginning in the second half of fiscal 2021.
We should also include Aurora's other major news item on Tuesday: the naming of Miguel Martin as its new CEO. Martin has been the company's chief commercial officer since July. He previously served as CEO of U.S. CBD company Reliva, which Aurora acquired earlier this year. His experience in the consumer packaged goods industry could be a good fit for the direction the company wants to pursue.
What to loathe
There were plenty of things for investors to absolutely loathe with Aurora's business update. Let's start with revenue. Aurora expects to report fiscal Q4 net revenue of between CA$70 million and CA$72 million, with cannabis net revenue between CA$66 million and CA$68 million. These ranges are below the company's results in fiscal Q3, when Aurora generated net revenue of CA$75.5 million, with cannabis net revenue of $69.6 million.
Aurora also said that it will record up to CA$1.8 billion in goodwill impairment charges in Q4. The company didn't provide full details on these impairment charges. However, it did state that the previously announced fixed asset impairment charges related to cutting back its production facilities were expected to reach up to CA$90 million. Aurora also said that around CA$140 million of the impairment charges related to the carrying value of inventory.
These impairment charges didn't include, however, the impact of some more bad news for Aurora. The company announced that it and the Ultimate Fighting Championship (UFC) had agreed to "mutually terminate their partnership" forged last year to determine if CBD products have potential benefits for mixed martial arts (MMA) fighters. Aurora anticipates recording a one-time charge of US$30 million in fiscal 2021 Q1 to terminate the contract.
Some investors might recall that Aurora has previously committed to generated adjusted EBITDA profitability in fiscal 2021 Q1. That's not going to happen. The company now says that it will achieve this goal in the second quarter of fiscal 2021.
What to wonder about
Aurora's business update leaves investors with plenty to wonder about. For example, will the company really deliver positive adjusted EBITDA in fiscal Q2 of 2021? Will the company have to resort to more dilution in the near future? Will Miguel Martin be up to the task of leading the beleaguered company?
The biggest question of all is this: When will the marijuana stock rebound? Aurora's share price is now down close to 70% year to date. There's not much in the company's update that gives investors any confidence that a huge comeback is right around the corner.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | You probably expected that Aurora Cannabis (NYSE: ACB) would have announced its fiscal 2020 fourth-quarter results by now. Another bright spot in Aurora's business update was that the company said it's now operating at a quarterly sales, general, and administrative (SG&A) expense run rate in the low CA$40 million range. However, it did state that the previously announced fixed asset impairment charges related to cutting back its production facilities were expected to reach up to CA$90 million. | You probably expected that Aurora Cannabis (NYSE: ACB) would have announced its fiscal 2020 fourth-quarter results by now. These changes include: Adjusting the total funded debt-to-equity covenant to 0.28:1 for fiscal 2020 Q4 and fiscal 2021 Q1 Reducing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) milestones for the trailing 12-month period ending June 30, 2021, to 20 million in Canadian dollars from CA$51 million Reducing the size of the company's revolving credit facility to CA$15 million from CA$43 million These amendments are good for Aurora because they increase the company's already limited financial flexibility. Aurora expects to report fiscal Q4 net revenue of between CA$70 million and CA$72 million, with cannabis net revenue between CA$66 million and CA$68 million. | You probably expected that Aurora Cannabis (NYSE: ACB) would have announced its fiscal 2020 fourth-quarter results by now. These changes include: Adjusting the total funded debt-to-equity covenant to 0.28:1 for fiscal 2020 Q4 and fiscal 2021 Q1 Reducing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) milestones for the trailing 12-month period ending June 30, 2021, to 20 million in Canadian dollars from CA$51 million Reducing the size of the company's revolving credit facility to CA$15 million from CA$43 million These amendments are good for Aurora because they increase the company's already limited financial flexibility. Aurora expects to report fiscal Q4 net revenue of between CA$70 million and CA$72 million, with cannabis net revenue between CA$66 million and CA$68 million. | You probably expected that Aurora Cannabis (NYSE: ACB) would have announced its fiscal 2020 fourth-quarter results by now. He previously served as CEO of U.S. CBD company Reliva, which Aurora acquired earlier this year. Aurora expects to report fiscal Q4 net revenue of between CA$70 million and CA$72 million, with cannabis net revenue between CA$66 million and CA$68 million. |
37302.0 | 2020-09-08 00:00:00 UTC | Why Aurora Cannabis Stock Plunged Today | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-stock-plunged-today-2020-09-08 | nan | nan | What happened
Shares of Aurora Cannabis (NYSE: ACB) fell 11.8% on Tuesday after its business updates were poorly received by investors.
So what
Aurora said its fourth-quarter net revenue is likely to be between 70 million and 72 million Canadian dollars ($53 million to $55 million). That's down from CA$78.4 million in the third quarter and below analysts' estimates of CA$77 million.
Aurora Cannabis' stock price fell sharply on Tuesday. Image source: Getty Images.
Worse still, Aurora expects to record an impairment charge of as much as $1.8 billion. The cannabis company is writing down the value of its production facilities and a significant portion of its inventory.
Moreover, Aurora said it and the UFC had mutually agreed to terminate their CBD-focused research partnership. Aurora will pay the popular mixed martial arts league $30 million to terminate their contract in the first quarter of 2021.
Now what
To help right the ship, Aurora named a new chief executive officer. Miguel Martin will replace interim CEO Michael Singer -- who took over the role in February -- effective immediately. Singer will stay on as executive chairman.
Martin joined Aurora when it acquired Reliva in May. He was the hemp-derived CBD product maker's CEO, and he became Aurora's chief commercial officer in July.
Martin will face a host of challenges. He'll be tasked with right-sizing Aurora's production network and moving the company toward profitability, at a time when a dearth of retail stores and a persistently strong black market continue to stifle the legalized marijuana industry's growth.
Martin will have an opportunity to share more of his vision for the company's future during Aurora's upcomingearnings conference call which will take place on Sep. 22 at 5 p.m. EDT.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 11.8% on Tuesday after its business updates were poorly received by investors. He'll be tasked with right-sizing Aurora's production network and moving the company toward profitability, at a time when a dearth of retail stores and a persistently strong black market continue to stifle the legalized marijuana industry's growth. Martin will have an opportunity to share more of his vision for the company's future during Aurora's upcomingearnings conference call which will take place on Sep. 22 at 5 p.m. EDT. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 11.8% on Tuesday after its business updates were poorly received by investors. Aurora Cannabis' stock price fell sharply on Tuesday. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 11.8% on Tuesday after its business updates were poorly received by investors. So what Aurora said its fourth-quarter net revenue is likely to be between 70 million and 72 million Canadian dollars ($53 million to $55 million). 10 stocks we like better than Aurora Cannabis Inc. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 11.8% on Tuesday after its business updates were poorly received by investors. 10 stocks we like better than Aurora Cannabis Inc. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! |
37303.0 | 2020-09-08 00:00:00 UTC | Is Aurora Cannabis a Hold? | ACB | https://www.nasdaq.com/articles/is-aurora-cannabis-a-hold-2020-09-08 | nan | nan | New leadership at a company can often get investors excited about a stock, but that wasn't the case on Tuesday with Aurora Cannabis (NYSE: ACB) analyst Glenn Matson, who tracks the marijuana company for Ladenburg Thalmann. Matson downgraded his recommendation on Aurora, shifting it to neutral from his previous buy.
The downgrade follows the company's news that it has tapped former Chief Commercial Officer Miguel Martin to be its permanent CEO, replacing interim chief Michael Singer. On the same day, Aurora provided several business updates. Among these were fourth-quarter revenue and gross-margin forecasts.
Image source: Getty Images.
Discouragingly, the company expects a quarter-over-quarter decline in the former, at 70 million Canadian dollars ($53 million) to CA$72 million ($55 million) from the third-quarter's CA$75.5 million ($58 million). It did not proffer any net profit estimates, which might be telling.
Matson, for one, is growing less optimistic about Aurora's prospects for landing comfortably in the black. While he feels that the company's cash position is strong enough to meaningfully reduce debt, "we are less confident it can meet its profitability targets."
And while Aurora's native market should begin to coalesce, he isn't necessarily convinced the company will exploit the situation: "[W]e expect [Aurora] should emerge to benefit from a Canadian market post-consolidation, though we wait for further evidence of progress on both a company level and across the market before we grow more constructive."
Aurora was hardly a favored marijuana stock on Tuesday. The stock closed nearly 12% down on the day, well exceeding the declines of the top equity indexes.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | New leadership at a company can often get investors excited about a stock, but that wasn't the case on Tuesday with Aurora Cannabis (NYSE: ACB) analyst Glenn Matson, who tracks the marijuana company for Ladenburg Thalmann. While he feels that the company's cash position is strong enough to meaningfully reduce debt, "we are less confident it can meet its profitability targets." When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. | New leadership at a company can often get investors excited about a stock, but that wasn't the case on Tuesday with Aurora Cannabis (NYSE: ACB) analyst Glenn Matson, who tracks the marijuana company for Ladenburg Thalmann. Discouragingly, the company expects a quarter-over-quarter decline in the former, at 70 million Canadian dollars ($53 million) to CA$72 million ($55 million) from the third-quarter's CA$75.5 million ($58 million). After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | New leadership at a company can often get investors excited about a stock, but that wasn't the case on Tuesday with Aurora Cannabis (NYSE: ACB) analyst Glenn Matson, who tracks the marijuana company for Ladenburg Thalmann. And while Aurora's native market should begin to coalesce, he isn't necessarily convinced the company will exploit the situation: "[W]e expect [Aurora] should emerge to benefit from a Canadian market post-consolidation, though we wait for further evidence of progress on both a company level and across the market before we grow more constructive." See the 10 stocks *Stock Advisor returns as of August 1, 2020 Eric Volkman has no position in any of the stocks mentioned. | New leadership at a company can often get investors excited about a stock, but that wasn't the case on Tuesday with Aurora Cannabis (NYSE: ACB) analyst Glenn Matson, who tracks the marijuana company for Ladenburg Thalmann. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! |
37304.0 | 2020-09-08 00:00:00 UTC | Aurora Cannabis Names New CEO, Announces Preliminary Fiscal Q4 Results | ACB | https://www.nasdaq.com/articles/aurora-cannabis-names-new-ceo-announces-preliminary-fiscal-q4-results-2020-09-08 | nan | nan | Aurora Cannabis (NYSE: ACB), one of the more high-profile operators in the cannabis sector, announced Tuesday morning that it has tapped Miguel Martin to be its new CEO. The appointment is effective immediately, with Martin replacing interim CEO Michael Singer.
Martin has been Aurora's chief commercial officer since he joined the company in July via its acquisition of privately held U.S. cannabidiol (CBD) products specialist Reliva, where he was CEO. This makes him one of the few top-level cannabis industry executives with prior experience running a company involved in the business.
Image source: Getty Images.
Prior to that, he held managerial positions with tobacco giant Altria, among other companies.
Outgoing CEO Singer, who is remaining with the company as executive chairman of its board of directors, was quoted as saying that under Martin "Aurora's strategic direction going forward will be characterized by leading market performance, sustainable growth, profitability and value creation for shareholders."
Aurora also revealed several preliminary numbers for its fiscal Q4 2020, which ended June 30. The company estimates that it will report net revenue of between 70 million Canadian dollars and 72 million Canadian dollars ($53 million to $55 million), down from its fiscal Q3 result of CA$75.5 million ($58 million). The forecast for adjusted gross margin is 46% to 50%. Aurora did not provide guidance for net profit.
The company added that the implementation of its latest business strategy in on track. That involves growing market share in the most profitable market segments in Canada (including medical cannabis), enhancing its medical cannabis business abroad, and leveraging Reliva to "build leading brands" in the U.S. CBD segment.
Investors met these news items with skepticism. Aurora closed Tuesday down by more than 11%, compared to the 2.8% decline of the broad-market S&P 500 index.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB), one of the more high-profile operators in the cannabis sector, announced Tuesday morning that it has tapped Miguel Martin to be its new CEO. Martin has been Aurora's chief commercial officer since he joined the company in July via its acquisition of privately held U.S. cannabidiol (CBD) products specialist Reliva, where he was CEO. Outgoing CEO Singer, who is remaining with the company as executive chairman of its board of directors, was quoted as saying that under Martin "Aurora's strategic direction going forward will be characterized by leading market performance, sustainable growth, profitability and value creation for shareholders." | Aurora Cannabis (NYSE: ACB), one of the more high-profile operators in the cannabis sector, announced Tuesday morning that it has tapped Miguel Martin to be its new CEO. This makes him one of the few top-level cannabis industry executives with prior experience running a company involved in the business. The company estimates that it will report net revenue of between 70 million Canadian dollars and 72 million Canadian dollars ($53 million to $55 million), down from its fiscal Q3 result of CA$75.5 million ($58 million). | Aurora Cannabis (NYSE: ACB), one of the more high-profile operators in the cannabis sector, announced Tuesday morning that it has tapped Miguel Martin to be its new CEO. Outgoing CEO Singer, who is remaining with the company as executive chairman of its board of directors, was quoted as saying that under Martin "Aurora's strategic direction going forward will be characterized by leading market performance, sustainable growth, profitability and value creation for shareholders." The company estimates that it will report net revenue of between 70 million Canadian dollars and 72 million Canadian dollars ($53 million to $55 million), down from its fiscal Q3 result of CA$75.5 million ($58 million). | Aurora Cannabis (NYSE: ACB), one of the more high-profile operators in the cannabis sector, announced Tuesday morning that it has tapped Miguel Martin to be its new CEO. This makes him one of the few top-level cannabis industry executives with prior experience running a company involved in the business. Outgoing CEO Singer, who is remaining with the company as executive chairman of its board of directors, was quoted as saying that under Martin "Aurora's strategic direction going forward will be characterized by leading market performance, sustainable growth, profitability and value creation for shareholders." |
37305.0 | 2020-09-08 00:00:00 UTC | TSX futures lower as oil prices slip | ACB | https://www.nasdaq.com/articles/tsx-futures-lower-as-oil-prices-slip-2020-09-08 | nan | nan | July 23 (Reuters) - Futures for Canada's main stock index pointed to a lower open on Tuesday as traders returning from a long weekend fretted over weaker oil prices and the recent slump in tech stocks on Wall Street.
September quarter futures on the S&P/TSX index SXFc1 were down 0.03% at 7:00 a.m. ET.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended 1.49% lower at 16,218.01 on Friday.
Financial markets in Canada were closed on Monday for the Labor Day holiday.
At 7:35 a.m. ET on Tuesday, Dow e-minis 1YMcv1 were down 104 points, or 0.37%. S&P 500 e-minis EScv1 were down 32.75 points, or 0.96% and Nasdaq 100 e-minis NQcv1 were down 299.25 points, or 2.59%. .N
TOP STORIES TOP/CAN
Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter.
Oil slid more than 3% towards $40 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.
Gold prices fell on Tuesday on a strong dollar but the metal held in a tight range buoyed by lingering economic concerns as investors awaited policy cues from the European Central Bank.
COMMODITIES AT 7:00 a.m. ET
Gold futures GCc2: $1,917; -0.5% GOL/
US crude CLc1: $37.97; -5.6% O/R
Brent crude LCOc1: $40.59; -3.4% O/R
FOR CANADIAN MARKETS NEWS, CLICK ON CODES:
TSX market report .TO
Canadian dollar and bonds report CAD/CA/
Reuters global stocks poll for Canada EQUITYPOLL1, EPOLL/CA
Canadian markets directory CANADA
(Reporting by Shashank Nayar in Bengaluru; Editing by Aditya Soni)
((Shashank.Nayar@thomsonreuters.com ; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2256;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. July 23 (Reuters) - Futures for Canada's main stock index pointed to a lower open on Tuesday as traders returning from a long weekend fretted over weaker oil prices and the recent slump in tech stocks on Wall Street. Oil slid more than 3% towards $40 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world. | Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. July 23 (Reuters) - Futures for Canada's main stock index pointed to a lower open on Tuesday as traders returning from a long weekend fretted over weaker oil prices and the recent slump in tech stocks on Wall Street. ET Gold futures GCc2: $1,917; -0.5% GOL/ US crude CLc1: $37.97; -5.6% O/R Brent crude LCOc1: $40.59; -3.4% O/R | Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. July 23 (Reuters) - Futures for Canada's main stock index pointed to a lower open on Tuesday as traders returning from a long weekend fretted over weaker oil prices and the recent slump in tech stocks on Wall Street. Gold prices fell on Tuesday on a strong dollar but the metal held in a tight range buoyed by lingering economic concerns as investors awaited policy cues from the European Central Bank. | Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. September quarter futures on the S&P/TSX index SXFc1 were down 0.03% at 7:00 a.m. Financial markets in Canada were closed on Monday for the Labor Day holiday. |
37306.0 | 2020-09-08 00:00:00 UTC | Aurora Cannabis names new CEO, to book $1.4 bln in charges | ACB | https://www.nasdaq.com/articles/aurora-cannabis-names-new-ceo-to-book-%241.4-bln-in-charges-2020-09-08 | nan | nan | Adds details on Q4 forecast, background
Sept 8 (Reuters) - Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter.
Martin will replace interim CEO Michael Singer, who will remain executive chairman, the company said in a statement.
Aurora in February announced the exit of founder and Chief Executive Officer Terry Booth, along with 500 job cuts and impairment charges, as it came under fire for its aggressive global expansion amid uncertain demand.
Aurora said it expects fourth-quarter net revenue to be between C$70 million and C$72 million, including C$66 million to C$68 million in cannabis net revenue.
($1 = 1.3155 Canadian dollars)
(Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni)
((Arunima.Kumar@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Adds details on Q4 forecast, background Sept 8 (Reuters) - Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. Martin will replace interim CEO Michael Singer, who will remain executive chairman, the company said in a statement. Aurora in February announced the exit of founder and Chief Executive Officer Terry Booth, along with 500 job cuts and impairment charges, as it came under fire for its aggressive global expansion amid uncertain demand. | Adds details on Q4 forecast, background Sept 8 (Reuters) - Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. Aurora in February announced the exit of founder and Chief Executive Officer Terry Booth, along with 500 job cuts and impairment charges, as it came under fire for its aggressive global expansion amid uncertain demand. Aurora said it expects fourth-quarter net revenue to be between C$70 million and C$72 million, including C$66 million to C$68 million in cannabis net revenue. | Adds details on Q4 forecast, background Sept 8 (Reuters) - Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. Aurora said it expects fourth-quarter net revenue to be between C$70 million and C$72 million, including C$66 million to C$68 million in cannabis net revenue. ($1 = 1.3155 Canadian dollars) (Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Adds details on Q4 forecast, background Sept 8 (Reuters) - Marijuana producer Aurora Cannabis Inc ACB.TO on Tuesday appointed insider Miguel Martin as its chief executive officer and said it would record up to C$1.8 billion ($1.37 billion) in impairment charges in the fourth quarter. Martin will replace interim CEO Michael Singer, who will remain executive chairman, the company said in a statement. Aurora in February announced the exit of founder and Chief Executive Officer Terry Booth, along with 500 job cuts and impairment charges, as it came under fire for its aggressive global expansion amid uncertain demand. |
37307.0 | 2020-09-08 00:00:00 UTC | Aurora Cannabis Appoints Miguel Martin As CEO; Announces Amendments To Credit Facility | ACB | https://www.nasdaq.com/articles/aurora-cannabis-appoints-miguel-martin-as-ceo-announces-amendments-to-credit-facility-2020 | nan | nan | (RTTNews) - Aurora Cannabis Inc. (ACB, ACB.TO) announced the appointment of Miguel Martin as Chief Executive Officer, effective immediately. Michael Singer, who has served as Interim CEO since February 2020, will remain Executive Chairman. Martin is a 25-year consumer packaged goods industry veteran who joined Aurora from Reliva where he served as Chief Executive Officer. He assumed the role of Chief Commercial Officer of Aurora in July 2020.
Aurora Cannabis said it expects fourth quarter net revenue between $70 and $72 million, including $66 to $68 million Cannabis net revenue. The company will record up to $1.8 billion in goodwill impairment charges in its fourth quarter.
Also, Aurora announced the company and UFC have agreed to mutually terminate their partnership. In connection with this, the company expects to make a one-time payment of US$30 million to terminate the contract in first quarter.
Aurora has reached an agreement with its syndicate of banks regarding amendments to its secured credit agreement. These amendments are expected to provide additional flexibility during its Business Transformation Plan. The amendments include: reduction in the size of the revolving facility from $43 million to $15 million; and reduction in the adjusted EBITDA milestones required for the trailing twelve-month period ending June 30, 2021 from $51 million to $20 million, including delaying the requirement to generate positive adjusted EBITDA to second quarter.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | (RTTNews) - Aurora Cannabis Inc. (ACB, ACB.TO) announced the appointment of Miguel Martin as Chief Executive Officer, effective immediately. Martin is a 25-year consumer packaged goods industry veteran who joined Aurora from Reliva where he served as Chief Executive Officer. In connection with this, the company expects to make a one-time payment of US$30 million to terminate the contract in first quarter. | (RTTNews) - Aurora Cannabis Inc. (ACB, ACB.TO) announced the appointment of Miguel Martin as Chief Executive Officer, effective immediately. Aurora Cannabis said it expects fourth quarter net revenue between $70 and $72 million, including $66 to $68 million Cannabis net revenue. The amendments include: reduction in the size of the revolving facility from $43 million to $15 million; and reduction in the adjusted EBITDA milestones required for the trailing twelve-month period ending June 30, 2021 from $51 million to $20 million, including delaying the requirement to generate positive adjusted EBITDA to second quarter. | (RTTNews) - Aurora Cannabis Inc. (ACB, ACB.TO) announced the appointment of Miguel Martin as Chief Executive Officer, effective immediately. Aurora Cannabis said it expects fourth quarter net revenue between $70 and $72 million, including $66 to $68 million Cannabis net revenue. The amendments include: reduction in the size of the revolving facility from $43 million to $15 million; and reduction in the adjusted EBITDA milestones required for the trailing twelve-month period ending June 30, 2021 from $51 million to $20 million, including delaying the requirement to generate positive adjusted EBITDA to second quarter. | (RTTNews) - Aurora Cannabis Inc. (ACB, ACB.TO) announced the appointment of Miguel Martin as Chief Executive Officer, effective immediately. Martin is a 25-year consumer packaged goods industry veteran who joined Aurora from Reliva where he served as Chief Executive Officer. In connection with this, the company expects to make a one-time payment of US$30 million to terminate the contract in first quarter. |
37308.0 | 2020-09-08 00:00:00 UTC | Aurora Cannabis appoints Miguel Martin as CEO | ACB | https://www.nasdaq.com/articles/aurora-cannabis-appoints-miguel-martin-as-ceo-2020-09-08 | nan | nan | Sept 8 (Reuters) - Pot producer Aurora Cannabis Inc ACB.TO said on Tuesday it has appointed Miguel Martin as its chief executive officer, effective immediately.
Martin will replace Michael Singer, who has served as interim CEO since February and will remain executive chairman, the company said in a statement.
(Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni)
((Arunima.Kumar@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sept 8 (Reuters) - Pot producer Aurora Cannabis Inc ACB.TO said on Tuesday it has appointed Miguel Martin as its chief executive officer, effective immediately. Martin will replace Michael Singer, who has served as interim CEO since February and will remain executive chairman, the company said in a statement. (Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sept 8 (Reuters) - Pot producer Aurora Cannabis Inc ACB.TO said on Tuesday it has appointed Miguel Martin as its chief executive officer, effective immediately. Martin will replace Michael Singer, who has served as interim CEO since February and will remain executive chairman, the company said in a statement. (Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sept 8 (Reuters) - Pot producer Aurora Cannabis Inc ACB.TO said on Tuesday it has appointed Miguel Martin as its chief executive officer, effective immediately. Martin will replace Michael Singer, who has served as interim CEO since February and will remain executive chairman, the company said in a statement. (Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sept 8 (Reuters) - Pot producer Aurora Cannabis Inc ACB.TO said on Tuesday it has appointed Miguel Martin as its chief executive officer, effective immediately. Martin will replace Michael Singer, who has served as interim CEO since February and will remain executive chairman, the company said in a statement. (Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. |
37309.0 | 2020-09-07 00:00:00 UTC | What Does This Recent Milestone for Canadian Pot Companies Mean for Investors? | ACB | https://www.nasdaq.com/articles/what-does-this-recent-milestone-for-canadian-pot-companies-mean-for-investors-2020-09-07 | nan | nan | Canada updated its quarterly sales numbers for the nationwide cannabis industry on Sep. 4. During the second quarter, which lasted from April to June, household spending on unlicensed cannabis totaled 785 million Canadian dollars and was down 4.7% from the previous quarter. This number has declined in every period since the recreational market opened in Canada on October 17, 2018. In the legal market, CA$648 million was spent on recreational pot and CA$155 million was spent on medicinal marijuana, combining for a total of CA$803 million.
At first glance, this sounds huge for Canadian cannabis companies. It's the first time the legal marijuana market has come out ahead of the illicit market in terms of sales. But the win is coming at a cost: Much lower margins. Here's a look at why, despite a shrinking black market for marijuana, things may not get better for Canadian pot stocks.
Companies are focusing on value brands
The legal market's win in Q2 is proof that Canadian cannabis companies' focus --lowering prices for consumers -- is working. Original Stash is a value brand that pot producer HEXO (NYSE: HEXO) launched last October, specifically targeting the black market and boosting licit sales by offering goods at prices as low as CA$4.49 per gram, including tax. In January, Statistics Canada estimated the average price of illegal cannabis to be CA$5.73 per gram.
Image source: Getty Images.
In HEXO's most recent quarterly results, released on June 11 for the period ended April 30, its gross revenue of CA$30.9 million was nearly double the CA$15.9 million it brought in during the same period last year. But despite the significant increase in revenue, HEXO only generated an extra CA$2.4 million in gross margin (before adjustments for fair value). After subtracting excise taxes and costs of goods sold, just 28.5% of the top line remained, compared to 40.3% a year ago.
Excise taxes are relevant here, since the calculation assumes a flat-rate duty -- so a low-priced product could generate a higher excise cost per gram. Unsurprisingly, HEXO noted that the key driver in the company's increase in sales for the quarter was its value brand, Original Stash.
Investors saw similar trends when rival Aurora Cannabis (NYSE: ACB) released its most recent results. On May 14, the company released its third-quarter report for the period ended March 31, in which its gross sales rose by 19% year over year. And once again, by the time that revenue got to the gross profit line before fair value adjustments, there was a story to tell. The company's gross margin of CA$31.9 million declined by 12% from the prior-year period. Aurora Cannabis credits "a significant shift in our product mix toward our new Daily Special value brand" as a key driver of strong quarterly numbers.
In Q3, the company said that excise taxes negatively impacted Aurora's gross margin by 5%. A year earlier, the percentage was just 4%. The average net selling price of consumer cannabis in Q3 was just CA$4.33, down 21% from CA$5.48 a year ago.
Why this could hurt pot stock pickers
Lower prices and slimmer margins are going to make it challenging for cannabis companies to reach their profitability goals. In a June 23 update, Aurora Cannabis said that it was still on track for its goal of reaching positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) number by the first quarter of fiscal 2021.
But that's an ambitious target given that in Q3 that number was a negative CA$50.9 million. A year earlier, the company was actually closer to breakeven with an adjusted EBITDA loss of CA$36.6 million. If the company continues to push its value brand, then margins may continue to erode, meaning it'll take even more revenue to breakeven. If that sales growth can't keep up with shrinking margins, investors can expect share prices to nosedive.
Key takeaways for investors
Hitting this milestone was important for the Canadian cannabis industry in order to show that it can compete with the illicit market. But for this pattern to continue, companies like Aurora and HEXO will need to continue being as competitive as the black market, or even more so, in order to retain market share. But lower prices may be doing more harm than good, especially if it reduces profits and cash flow -- two traits investors will undoubtedly look for.
In February, Ello Capital speculated that Aurora had just a few months of liquidity left. That definitely didn't help its stock, and over the past year both Aurora and HEXO shareholders have suffered significant losses:
^SPX data by YCharts
It's going to take more than just sales growth to win investors back, especially if higher revenue numbers don't lead to a stronger bottom line. That's why, although hitting the milestone was great for the Canadian cannabis industry, it may not be a good sign for pot stocks in Canada overall. If selling prices continue to drop, this could be one crowded race to the bottom.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Investors saw similar trends when rival Aurora Cannabis (NYSE: ACB) released its most recent results. Aurora Cannabis credits "a significant shift in our product mix toward our new Daily Special value brand" as a key driver of strong quarterly numbers. Why this could hurt pot stock pickers Lower prices and slimmer margins are going to make it challenging for cannabis companies to reach their profitability goals. | Investors saw similar trends when rival Aurora Cannabis (NYSE: ACB) released its most recent results. In the legal market, CA$648 million was spent on recreational pot and CA$155 million was spent on medicinal marijuana, combining for a total of CA$803 million. Original Stash is a value brand that pot producer HEXO (NYSE: HEXO) launched last October, specifically targeting the black market and boosting licit sales by offering goods at prices as low as CA$4.49 per gram, including tax. | Investors saw similar trends when rival Aurora Cannabis (NYSE: ACB) released its most recent results. In the legal market, CA$648 million was spent on recreational pot and CA$155 million was spent on medicinal marijuana, combining for a total of CA$803 million. Companies are focusing on value brands The legal market's win in Q2 is proof that Canadian cannabis companies' focus --lowering prices for consumers -- is working. | Investors saw similar trends when rival Aurora Cannabis (NYSE: ACB) released its most recent results. But the win is coming at a cost: Much lower margins. In HEXO's most recent quarterly results, released on June 11 for the period ended April 30, its gross revenue of CA$30.9 million was nearly double the CA$15.9 million it brought in during the same period last year. |
37310.0 | 2020-09-02 00:00:00 UTC | Marijuana Stocks: Buy This, Not That | ACB | https://www.nasdaq.com/articles/marijuana-stocks%3A-buy-this-not-that-2020-09-02 | nan | nan | In the days before and after Canada's legalization of recreational cannabis in October 2018, marijuana stocks garnered a lot of attention. However, fewer legal stores than expected, regulatory delays, the illicit market, and other factors challenged legal sales, and the sector suffered huge losses in 2019. The Horizons Marijuana Life Sciences ETF, the industry benchmark, fell 36% over the course of the year.
However, the cannabis sector hasn't entirely lost its steam. Marijuana was declared an essential item in Canada and many U.S. locales during the coronavirus pandemic, and most U.S. cannabis companies have seen spectacular revenue numbers this year. In general, though, Canadian companies are still facing issues -- though one in particular is thriving. Aphria (NASDAQ: APHA) gives you some good reasons to buy.
Contrast this with Aurora Cannabis (NYSE: ACB), which has a spotty history that makes it hard to trust its efforts to recover this year. It has failed to meet its targets many times before. Both These two companies have similar market caps -- Aurora at $1.1 billion, Aphria at $1.3 billion -- but have a very different approach to business.
Image source: Getty Images.
Why Aphria is a good cannabis pick
Aphria cultivates and sells a variety of medical and adult-use cannabis products to consumers under brands like Aphria, Broken Coast, and Good Supply. After Canada legalized cannabis derivative products (vapes, edibles, beverages, and more) in October 2019, Aphria launched its vape products in the market.
Where peers are struggling to make profits, Aphria has seen positive EBITDA (earnings before income, tax, depreciation, and amortization) for five consecutive quarters, including its recent fourth quarter, ended May 31. EBITDA can be a good measure of how efficiently a company is handling its operating expenses, and Aphria's consolidated adjusted EBITDA in the quarter was up a dazzling 49%, to 8.6 million Canadian dollars, from the year-ago quarter. Consistent hikes in revenue and gross profit were big drivers of this success.
Aphria's strength in medical and recreational cannabis means high revenues not just in Canada but from international markets. And those revenues are increasing -- even though they're already among the highest in the industry. For fiscal 2020, Aphria's revenue jumped 129%, to CA$543.3 million, from 2019. Meanwhile, Canopy Growth (NYSE: CGC), with a much larger market cap of $6.9 billion, reported a revenue increase of 76% year over year to CA$399 million for fiscal 2020. Canopy also launched a wide array of vapes, marijuana-infused beverages, and chocolates in May.
Aphria has been able to successfully achieve all this because of its strong leadership team under CEO Irwin Simon. Simon took charge as interim CEO in March 2019, before which he served as the independent chair of the board of directors. Since then, the company has shifted to an asset-light business model, focusing on its core operations and keeping its balance sheet tight. Simon's track record is evident from the success of packaged goods company Hain Celestial, which he founded and ran for 25 years.
Image source: Getty Images.
Why you should think again before considering Aurora Cannabis
Demand for cannabis, and excitement about the sector, had Aurora's management spending like crazy last year -- acquiring other companies and expanding its production facilities without heeding the rising debt. But the external headwinds in the Canadian market, like illegal sales and a slower rollout of legal stores than had been expected, challenged revenues for pot companies, and Aurora was no different. Its mounting losses and debt burden pulled its stock price below $1, which is against New York Stock Exchange (NYSE) trading compliance. If a stock trades below $1 for long enough, it receives a delisting warning notification from the NYSE. CEO Terry Booth stepped down in February, which didn't help; a sudden C-suite leadership change doesn't usually sit well with investors.
Aurora had to take some drastic last-minute measures to save its stock from being delisted. It executed a one-for-12 reverse stock split on May 11. Better-than-expected third-quarter results also boosted the stock price, moving it over $1.
As with Aphria, revenue is rising for Aurora as well. But given that the companies have similar market caps, the difference in their numbers is vast. Aurora managed to reach CA$75.5 million in net revenue in its recent Q3 2020, ended March 31 -- a year-over-year increase of 16%. The company is not even close to pulling off Aphria's (or Canopy's) revenue numbers for the full year.
Despite the hike in revenue, its EBITDA came in negative at CA$50.8 million, compared with a loss of CA$37 million in the year-ago quarter. This was because of a jump of 19% in selling, general, and administrative expenses (SG&A), to CA$75 million.
With all that said, management is making strides this year to reduce costs. They announced some operational changes -- what the company calls a "facility rationalizations plan" -- in June, closing five smaller facilities with plans to merge several others into one by the second quarter of 2021. Meanwhile, management intends to ramp up operations at their Nordic facility in Europe. These changes are intended to help reduce expenses, improve margins, and help Aurora hit profitability by the first quarter of 2021.
What's worrisome, though, is that Aurora's management has made similar promises in the past and failed to deliver. In its third-quarter 2019earnings call in May 2019, management spoke of their plan to report positive EBITDA by the fourth quarter of fiscal 2019. However, it failed to hit the target and instead reported a loss of CA$36.6 million. Losses kept accumulating thereafter, which makes it hard to trust management's word on this.
Aphria is the better choice
Shares of Aphria and Canopy have fallen 10% and 20% so far this year, while Aurora has declined by 62.1%. Meanwhile, the industry benchmark, the Horizons Marijuana Life Sciences ETF, has dipped 25.3% over the same period.
ACB data by YCharts
Aphria is clearly the better cannabis pick over Aurora Cannabis -- but the latter may not have reached a complete dead end. If its cost-cutting strategies work out, things could shine for the company again. We will know more in its fourth-quarter results, expected Sept. 9. For now, it's a stock you should avoid.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Contrast this with Aurora Cannabis (NYSE: ACB), which has a spotty history that makes it hard to trust its efforts to recover this year. ACB data by YCharts Aphria is clearly the better cannabis pick over Aurora Cannabis -- but the latter may not have reached a complete dead end. Marijuana was declared an essential item in Canada and many U.S. locales during the coronavirus pandemic, and most U.S. cannabis companies have seen spectacular revenue numbers this year. | Contrast this with Aurora Cannabis (NYSE: ACB), which has a spotty history that makes it hard to trust its efforts to recover this year. ACB data by YCharts Aphria is clearly the better cannabis pick over Aurora Cannabis -- but the latter may not have reached a complete dead end. The Horizons Marijuana Life Sciences ETF, the industry benchmark, fell 36% over the course of the year. | Contrast this with Aurora Cannabis (NYSE: ACB), which has a spotty history that makes it hard to trust its efforts to recover this year. ACB data by YCharts Aphria is clearly the better cannabis pick over Aurora Cannabis -- but the latter may not have reached a complete dead end. Why Aphria is a good cannabis pick Aphria cultivates and sells a variety of medical and adult-use cannabis products to consumers under brands like Aphria, Broken Coast, and Good Supply. | Contrast this with Aurora Cannabis (NYSE: ACB), which has a spotty history that makes it hard to trust its efforts to recover this year. ACB data by YCharts Aphria is clearly the better cannabis pick over Aurora Cannabis -- but the latter may not have reached a complete dead end. Meanwhile, Canopy Growth (NYSE: CGC), with a much larger market cap of $6.9 billion, reported a revenue increase of 76% year over year to CA$399 million for fiscal 2020. |
37311.0 | 2020-09-01 00:00:00 UTC | TSX rises 0.79% to 16,644.99 | ACB | https://www.nasdaq.com/articles/tsx-rises-0.79-to-16644.99-2020-09-01 | nan | nan | * The Toronto Stock Exchange's TSX rises 0.79 percent to 16,644.99
* Leading the index were Kinaxis Inc , up 7.9%, Enghouse Systems Ltd ENGH.TO, up 7.9%, and Ivanhoe Mines Ltd IVN.TO, higher by 7.4%.
* Lagging shares were Aurora Cannabis Inc ACB.TO, down 5.6%, Cineplex Inc CGX.TO, down 3.2%, and B2Gold Corp BTO.TO, lower by 3.1%.
* On the TSX 143 issues rose and 73 fell as a 2-to-1 ratio favored advancers. There were 8 new highs and no new lows, with total volume of 199.8 million shares.
* The most heavily traded shares by volume were Suncor Energy Inc SU.TO, Algonquin Power & Utilities Corp AQN.TO and Manulife Financial Corp MFC.TO.
* The TSX's energy group .SPTTEN rose 0.82 points, or 1.0%, while the financials sector .SPTTFS climbed 0.13 points, or 0.1%.
* West Texas Intermediate crude futures CLc1 rose 0.92%, or $0.39, to $43 a barrel. Brent crude LCOc1 rose 1.17%, or $0.53, to $45.81 O/R
* The TSX is off 2.5% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 5.6%, Cineplex Inc CGX.TO, down 3.2%, and B2Gold Corp BTO.TO, lower by 3.1%. * The Toronto Stock Exchange's TSX rises 0.79 percent to 16,644.99 * Leading the index were Kinaxis Inc , up 7.9%, Enghouse Systems Ltd ENGH.TO, up 7.9%, and Ivanhoe Mines Ltd IVN.TO, higher by 7.4%. * On the TSX 143 issues rose and 73 fell as a 2-to-1 ratio favored advancers. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 5.6%, Cineplex Inc CGX.TO, down 3.2%, and B2Gold Corp BTO.TO, lower by 3.1%. * The most heavily traded shares by volume were Suncor Energy Inc SU.TO, Algonquin Power & Utilities Corp AQN.TO and Manulife Financial Corp MFC.TO. * The TSX's energy group .SPTTEN rose 0.82 points, or 1.0%, while the financials sector .SPTTFS climbed 0.13 points, or 0.1%. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 5.6%, Cineplex Inc CGX.TO, down 3.2%, and B2Gold Corp BTO.TO, lower by 3.1%. * The most heavily traded shares by volume were Suncor Energy Inc SU.TO, Algonquin Power & Utilities Corp AQN.TO and Manulife Financial Corp MFC.TO. * The TSX's energy group .SPTTEN rose 0.82 points, or 1.0%, while the financials sector .SPTTFS climbed 0.13 points, or 0.1%. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 5.6%, Cineplex Inc CGX.TO, down 3.2%, and B2Gold Corp BTO.TO, lower by 3.1%. * The Toronto Stock Exchange's TSX rises 0.79 percent to 16,644.99 * Leading the index were Kinaxis Inc , up 7.9%, Enghouse Systems Ltd ENGH.TO, up 7.9%, and Ivanhoe Mines Ltd IVN.TO, higher by 7.4%. * On the TSX 143 issues rose and 73 fell as a 2-to-1 ratio favored advancers. |
37312.0 | 2020-09-01 00:00:00 UTC | 3 Top Robinhood Stocks to Avoid Like the Plague in September | ACB | https://www.nasdaq.com/articles/3-top-robinhood-stocks-to-avoid-like-the-plague-in-september-2020-09-01 | nan | nan | If there's one thing you should understand about the stock market, it's that it's consistently unpredictable in the short run. In just a sixth-month period in 2020, we've witnessed the steepest descent into bear market territory in history, as well as the quickest rally back to all-time highs from a bear market bottom on record.
For long-term investors, this heightened volatility is a blessing since it allows for great stocks to be purchased at a perceived discount. After all, the stock market has eventually put every single correction and bear market in history in the rearview mirror.
Image source: Getty Images.
Avoid these popular Robinhood stocks like the plague
However, cramming a decade's worth of volatility into a six-month stretch has also brought short-term traders and novice investors out of the woodwork. If you don't believe me, just take a gander at how ownership statistics in stocks have ballooned on online investing platform Robinhood since February.
Robinhood, which is best-known for its commission-free trades and divvying out free shares of stock when signing up for an account, has been particularly popular with young and/or novice investors. While encouraging millennials and Generation Z to invest early is actually a great thing, Robinhood is failing to provide the tools and knowledge necessary for these investors to be successful over long periods of time. The end result is that Robinhood's most-held stocks looks like a minefield of penny stocks, awful businesses, and whatever happens to be Wall Street's flavor of the week.
While not all of the most popular Robinhood stocks are avoidable, the shortsightedness of Robinhood investors should make any investor think twice about putting their money to work in any of the platform's most popular stocks.
As we move headlong into September, I believe the following three top Robinhood stocks should be avoided like the plague
A Tesla Model S plugged in for charging. Image source: Tesla.
Tesla
Though it's quite possibly the hottest stock on Wall Street right now, I'd strongly suggest investors keep their distance from electric-vehicle (EV) kingpin Tesla (NASDAQ: TSLA) in September.
Easily the most maddening aspect of Tesla has been the euphoria surrounding the company's 5-for-1 stock split, which went into effect this past weekend. Since announcing that it would split its stock, shares of Tesla have gained nearly $160 billion in market value. While a stock split can signify that a business is running on all cylinders, the split itself is a non-event. In other words, it doesn't create value for shareholders, nor does it change the fundamental outlook for the company. Thus, the almost $160 billion gain in market cap for Tesla looks unwarranted and has probably been driven by short-term traders not wanting to miss out.
Beyond just emotional traders driving Tesla's stock higher, I genuinely worry about Tesla being able to come anywhere close to Wall Street's now-lofty expectations. Much like the airline industry, the auto industry is a capital-intensive, low-margin industry that's based on volume. Tesla's operating margin over the trailing 12-month period is a meager 4.7%, and competition is about to pick up given that Ford and General Motors are investing heavily in EVs and/or autonomous vehicles. Tesla may have had a clear-cut first-mover advantage at one time, but I don't see it anymore.
Additionally, don't overlook how reliant Tesla has been on tax credits to drive its profitability. This is a company that's yet to deliver a generally accepted accounting principles (GAAP) profit on a full-year basis, and who's CEO, Elon Musk, has frequently missed his own product launch and production guidance.
The risk of buying into Tesla here appears to greatly outweigh the potential reward.
Image source: Getty Images.
Aurora Cannabis
Another exceptionally popular Robinhood stock that I'd encourage investors to steer clear of in September is licensed marijuana producer Aurora Cannabis (NYSE: ACB).
On one hand, the bar looks to be low enough for Aurora to step cleanly over when it reports its fiscal fourth-quarter operating results this month. The company has slashed its selling, general, and administrative expenses to a range of $40 million Canadian to CA$45 million per quarter, which was a targeted range to achieve positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). It's also closed or sold a total of six of its 15 facilities since the year began.
But these necessary cost-cutting steps don't mask other issues or clues we've been given as investors. For instance, despite licensed cannabis store sales hitting monthly records in Canada, domestic sales figures for major pot stocks to our north are missing the mark in the May-ended or June-ended quarters. Competition is picking up in Canada, and the rollout of higher-margin derivative products has been slowed by regulatory issues.
What's more, Aurora's balance sheet is a mess heading into the company's fourth-quarter report, and it'll likely still be a mess after the report. This is a company that's frequently needed to turn to common stock sales to raise capital, and it's buried its longtime shareholder in these issuances for years. Meanwhile, the company's goodwill, inventory, intangible assets, and property, plant, and equipment values may all be in need of impairment charges.
Marijuana may be one of the fastest-growing industries of the decade, but Aurora Cannabis isn't the pot stock you want to buy to take advantage of this growth.
Image source: Apple.
Apple
Your eyes aren't deceiving you. I'd suggest you keep your distance from Apple (NASDAQ: AAPL) in September for some the same reasons you should avoid Tesla.
Apple, the third-most-held stock on Robinhood, as of mid-August, has been on fire since announcing its intention to split its stock 4-for-1 on July 30. In roughly one month since announcing (and now enacting) its split, Apple's stock gained more than $490 billion in market value. But, once again, a split has no bearing on a company's operating model or fundamentals, suggesting that emotion rather than rational buying has driven Apple's share price higher.
Don't get me wrong, Apple has a lot more to offer, fundamentally speaking, than Tesla. This is a company that has generated $80 billion in trailing 12-month operating cash flow and has one of the most loyal customer bases in the world. It's a very profitable, time-tested company.
But it's not worth paying a 30-plus forward earnings multiple for a company that has historically been valued between 10 and 20 times its forward earnings. Even though Apple's higher-margin services segment is growing at a double-digit rate, it's only accounted for 18.7% of total sales through the first nine months of fiscal 2020. Valuing Apple like a services company when less than 19% of total sales are derived from this high-margin segment doesn't make sense.
Please note that I've not given up on Apple as a company. However, the current valuation, even with its top-notch branding and innovation, isn't appealing to new investors.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Another exceptionally popular Robinhood stock that I'd encourage investors to steer clear of in September is licensed marijuana producer Aurora Cannabis (NYSE: ACB). Avoid these popular Robinhood stocks like the plague However, cramming a decade's worth of volatility into a six-month stretch has also brought short-term traders and novice investors out of the woodwork. While encouraging millennials and Generation Z to invest early is actually a great thing, Robinhood is failing to provide the tools and knowledge necessary for these investors to be successful over long periods of time. | Aurora Cannabis Another exceptionally popular Robinhood stock that I'd encourage investors to steer clear of in September is licensed marijuana producer Aurora Cannabis (NYSE: ACB). Beyond just emotional traders driving Tesla's stock higher, I genuinely worry about Tesla being able to come anywhere close to Wall Street's now-lofty expectations. For instance, despite licensed cannabis store sales hitting monthly records in Canada, domestic sales figures for major pot stocks to our north are missing the mark in the May-ended or June-ended quarters. | Aurora Cannabis Another exceptionally popular Robinhood stock that I'd encourage investors to steer clear of in September is licensed marijuana producer Aurora Cannabis (NYSE: ACB). While not all of the most popular Robinhood stocks are avoidable, the shortsightedness of Robinhood investors should make any investor think twice about putting their money to work in any of the platform's most popular stocks. Apple, the third-most-held stock on Robinhood, as of mid-August, has been on fire since announcing its intention to split its stock 4-for-1 on July 30. | Aurora Cannabis Another exceptionally popular Robinhood stock that I'd encourage investors to steer clear of in September is licensed marijuana producer Aurora Cannabis (NYSE: ACB). Since announcing that it would split its stock, shares of Tesla have gained nearly $160 billion in market value. Marijuana may be one of the fastest-growing industries of the decade, but Aurora Cannabis isn't the pot stock you want to buy to take advantage of this growth. |
37313.0 | 2020-08-30 00:00:00 UTC | 3 Reasons It's Not Too Late to Buy Aphria Stock | ACB | https://www.nasdaq.com/articles/3-reasons-its-not-too-late-to-buy-aphria-stock-2020-08-30 | nan | nan | Challenges in the marijuana industry are nothing new; profitability, in particular, has always been an issue for the Canadian pot companies. Their U.S. counterparts, on the other hand, have managed to generate profits. Ups and downs in the Canadian cannabis market -- regulatory delays, fewer legal stores than expected, and a thriving black market -- have weighed on profits.
Ontario-based Aphria (NASDAQ: APHA), however, is bucking the trend with a track record of consistent profitability over the past five consecutive quarters. So what is Aphria doing right? Here are three reasons that it is not too late to buy this stock.
Image Source: Getty Images.
1. Aphria's revenue numbers are outstanding
Aphria cultivates and sells medical and recreational cannabis products, with a compelling product portfolio that includes brands like its namesake Aphria, Broken Coast, Solei, RIFF, and Good Supply.
In the cannabis space, Aphria has an upper hand in sales, with fiscal 2020 revenue coming in at $543.3 million Canadian dollars, a year-over-year increase of 129%. Comparatively, Canopy Growth (NYSE: CGC) -- which boasts a market cap of $6.1 billion, almost 4 times Aphria's $1.3 billion -- reported revenue growth of 76%, to CA$399 million, for the same period.
Meanwhile, Aurora Cannabis (NYSE: ACB) reported net revenue growth of 16%, to CA$75.5 million, for the third quarter of 2020 from the prior-year quarter, while Cronos Group's (NASDAQ: CRON) second-quarter net revenue came in 29% higher than the year-ago quarter at CA$9.9 million. Both companies, which have market caps between $1 billion and $2 billion, are not even close yet to pulling off what Aphria has already achieved for the full year.
2. It has a track record of consistent profitability
Strength in Aphria's medical and adult-use market has helped it reach higher revenue and profits. In its recent fourth quarter, ended May 31, Aphria reported consolidated adjusted EBITDA (earnings before income, tax, depreciation, and amortization) of CA$8.6 million. That's a stunning 49% increase from CA$5.7 million in the year-ago quarter. (Positive EBITDA gives a sense of how well a company is handling its operating expenses.) Meanwhile, Aurora and Canopy have yet to achieve profitability.
Shares of Aphria have declined 12.4% so far this year, a smaller loss than Aurora's fall of 63.2% and Canopy's fall of 22%. The industry benchmark, the Horizons Marijuana Life Sciences ETF, has declined by 25.3% in the same period.
APHA data by YCharts
Aphria's net revenue was up 18% from the year-ago quarter to CA$152 million, with CA$65.4 million coming from cannabis products and CA$99.1 million from distribution revenue (from its German-based subsidiary CC Pharma and other distribution companies), less CA$12.3 million in excise taxes. Medical cannabis accounted for 13% of cannabis revenue, while recreational products made up the rest.
3. It has a strong leadership team
I attribute Aphria's strong revenue numbers and consistent profitability to its asset-light business model under the leadership of CEO Irwin Simon, who took over the reins as interim CEO in March 2019. Before that, he served as the independent chair of its board of directors. Simon is is the founder and former CEO of packaged goods company Hain Celestial Group, which reported $2.3 billion in revenue for fiscal 2019.
Irwin's strategy of focusing Aphria on its core operations in Canada has played out well. In contrast, Aurora has been on an acquisition spree that has left that company with a huge debt burden. Rising demand for cannabis made Aurora eager to capture the market, and management spent a huge amount of money acquiring other companies and expanding its facilities to ramp up production. However, external headwinds in the Canadian market affected revenue -- a lot. And then-CEO Terry Booth stepped down in February, adding to Aurora's pain.
Image source: Getty Images.
What does 2020 look like for Aphria?
Aphria has already created a stronghold with its medical and recreational cannabis operations in Canada, Germany, Italy, Malta, Colombia, and Argentina. Canada made recreational cannabis derivatives (vapes, edibles, concentrates, beverages, chocolates, and more) legal under "Cannabis 2.0" in October 2019, and Aphria was the first company to launch a variety of vape products in Canada. Its vape products have generated good sales.
All that said, Aphria reported a net loss of $98.8 million in Q4, driven by higher selling, general, and administrative (SG&A) expenses of CA$116.6 million. Changes made in its international operations caused a $64 million non-cash impairment charge, which contributed to the loss; I wouldn't fuss about this one-time coronavirus-related charge.
I'll be encouraged to see Aphria prioritize launching other varieties of derivatives, given the strong competition in the market. Canopy launched a diversified set of vapes, chocolates, and beverage products in May and has seen good sales numbers with positive feedback, according to its Q1 report.
Management has said it believes vape products in particular "represent a growing proportion of the Cannabis 2.0 market." Its cash position remains robust, with CA$497.2 million of cash and cash equivalents on the books in the recent quarter to fuel its expansion plans in Canada and internationally.
An already stable business, a strong leadership team, a robust balance sheet, growing revenue and profits, and innovative products all make Aphria an excellent cannabis pick for 2020.
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Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
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Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
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Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Meanwhile, Aurora Cannabis (NYSE: ACB) reported net revenue growth of 16%, to CA$75.5 million, for the third quarter of 2020 from the prior-year quarter, while Cronos Group's (NASDAQ: CRON) second-quarter net revenue came in 29% higher than the year-ago quarter at CA$9.9 million. In its recent fourth quarter, ended May 31, Aphria reported consolidated adjusted EBITDA (earnings before income, tax, depreciation, and amortization) of CA$8.6 million. Rising demand for cannabis made Aurora eager to capture the market, and management spent a huge amount of money acquiring other companies and expanding its facilities to ramp up production. | Meanwhile, Aurora Cannabis (NYSE: ACB) reported net revenue growth of 16%, to CA$75.5 million, for the third quarter of 2020 from the prior-year quarter, while Cronos Group's (NASDAQ: CRON) second-quarter net revenue came in 29% higher than the year-ago quarter at CA$9.9 million. APHA data by YCharts Aphria's net revenue was up 18% from the year-ago quarter to CA$152 million, with CA$65.4 million coming from cannabis products and CA$99.1 million from distribution revenue (from its German-based subsidiary CC Pharma and other distribution companies), less CA$12.3 million in excise taxes. It has a strong leadership team I attribute Aphria's strong revenue numbers and consistent profitability to its asset-light business model under the leadership of CEO Irwin Simon, who took over the reins as interim CEO in March 2019. | Meanwhile, Aurora Cannabis (NYSE: ACB) reported net revenue growth of 16%, to CA$75.5 million, for the third quarter of 2020 from the prior-year quarter, while Cronos Group's (NASDAQ: CRON) second-quarter net revenue came in 29% higher than the year-ago quarter at CA$9.9 million. Aphria's revenue numbers are outstanding Aphria cultivates and sells medical and recreational cannabis products, with a compelling product portfolio that includes brands like its namesake Aphria, Broken Coast, Solei, RIFF, and Good Supply. APHA data by YCharts Aphria's net revenue was up 18% from the year-ago quarter to CA$152 million, with CA$65.4 million coming from cannabis products and CA$99.1 million from distribution revenue (from its German-based subsidiary CC Pharma and other distribution companies), less CA$12.3 million in excise taxes. | Meanwhile, Aurora Cannabis (NYSE: ACB) reported net revenue growth of 16%, to CA$75.5 million, for the third quarter of 2020 from the prior-year quarter, while Cronos Group's (NASDAQ: CRON) second-quarter net revenue came in 29% higher than the year-ago quarter at CA$9.9 million. So what is Aphria doing right? Meanwhile, Aurora and Canopy have yet to achieve profitability. |
37314.0 | 2020-08-27 00:00:00 UTC | Could There Be a Marijuana Mega-Merger in the Future? | ACB | https://www.nasdaq.com/articles/could-there-be-a-marijuana-mega-merger-in-the-future-2020-08-27 | nan | nan | The cannabis industry is overdue for some big activity on the mergers and acquisitions front. In March, Harvest Health and Verano backed away from a deal that would've seen the two companies come together in the largest merger in the U.S. cannabis industry to date, valued at $850 million.
If another industry merger does come, it's likely to be much larger than that. Many cannabis companies today are valued at more than $1 billion. And with some pot stocks struggling while others are looking to expand, it may not be all that long before a deal comes together. Here are two possible mergers that could make a lot of sense.
1. Aurora and Aphria
There were already rumors circulating around a possible merger involving Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) earlier this year. While nothing ended up materializing from those talks, I still wouldn't rule it out. These are two of the largest cannabis companies in Canada with very different things to offer one another, and both of their shareholders would benefit.
Image source: Getty Images.
For Aurora, linking up with Aphria would help improve its financial position overnight. In three of the past five quarters, Aphria has posted a profit, and for five straight quarters, its adjusted earnings before income, taxes, and depreciation (EBITDA) number has been in the black. Aurora, meanwhile, has incurred a loss in all but one of its most recent six quarters, and its one profitable showing was thanks to a boost from other income. That lack of profitability is a big problem for Aurora, and merging with Aphria could alleviate those concerns for its investors.
For Aphria, meanwhile, a merger would make the company a lot bigger a lot quicker. Aurora's total assets, excluding goodwill, total 2.3 billion Canadian dollars; that's more than the CA$1.9 billion that Aphria has after factoring out its goodwill. Both companies also have large global footprints, so combining could not just expand their total global footprint, bring economies of scale, potentially bringing down costs in areas where they both operate.
Aurora has generated CA$306 million in revenue over the past four quarters, while Aphria has reported CA$543 million. Combined, the companies could be well on their way to hitting the CA$1 billion mark next year.
Such a move would create a definitive leader in the Canadian cannabis industry, accelerating Aphria's growth while providing Aurora with the financial stability it needs. It's a merger that could make a lot of sense from both sides. Aphria's market cap of $1.3 billion and Aurora's valuation of just over $1 billion would make the combined company significantly larger than the total value of the now-abandoned Harvest-Verano merger.
2. Curaleaf and Trulieve
An even bigger, potentially game-changing merger is possible in the U.S. cannabis market: Curaleaf (OTC: CURLF) and Trulieve Cannabis (OTC: TCNNF) joining forces. Although there are no known talks going on between these two multistate operators, a deal here could work for both sides. Trulieve is dominant in its home state of Florida, and that's where it's been focusing its efforts, with 55 of its 57 dispensaries located there.
In second-quarter earnings, released Aug. 12 for the period ending June 30, the company said it planned to enter the Massachusetts market next year. It already owns assets there, and in June the state's Cannabis Control Commission gave Trulieve provisional licenses for cultivation and the operation of a retail cannabis establishment.
Also on the company's earnings release, Trulieve CEO Kim Rivers referred to a "[mergers and acquisitions] pipeline" that could "present new opportunities for expansion." While that could simply allude to acquiring smaller cannabis operators within states the company is looking to expand into, a quicker -- and more significant -- move would be to merge with Curaleaf. That company is based in Massachusetts and operates in 23 states. It's also growing its presence throughout the country, including in Florida, where it opened its 29th storefront location earlier this month. Rather than duke it out for market share in both Florida and Massachusetts, by merging the two companies would save resources and potentially improve their margins by not having to compete against one another.
In Q2, Trulieve reported sales of $120.8 million. On Aug. 17, Curaleaf reported its second-quarter results for the same period; its pro forma revenue, including pending acquisitions, totaled $165.4 million. Combined, that would put both companies at about $286 million in revenue; even with no further growth, they could reach the $1 billion mark in sales for a full year.
Trulieve's market cap is $2.3 billion and Curaleaf is valued at $4.3 billion, making this an even larger potential deal than a merger involving Aphria and Aurora.
Will a deal happen?
These potential deals make sense for a lot of reasons, but that doesn't mean they'll happen. There needs to be a catalyst to bring either pair of companies together. In Canada, the need for cash flow and some long-term stability is what may drive Aurora to make a deal happen with Aphria or another large company. In the U.S., however, the driving force may be the urge to become a large, undisputed industry leader before cannabis is legal in the U.S. and competition increases exponentially. But right now, there's no telling when that will be.
An Aphria-Aurora deal seems the more likely possibility at this point, only because Aurora may be inclined to make a move soon if its financial position deteriorates. And once one deal happens, others could soon follow suit, as the arms race in the cannabis industry may get going again in a hurry.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora and Aphria There were already rumors circulating around a possible merger involving Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) earlier this year. In March, Harvest Health and Verano backed away from a deal that would've seen the two companies come together in the largest merger in the U.S. cannabis industry to date, valued at $850 million. Such a move would create a definitive leader in the Canadian cannabis industry, accelerating Aphria's growth while providing Aurora with the financial stability it needs. | Aurora and Aphria There were already rumors circulating around a possible merger involving Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) earlier this year. Aurora's total assets, excluding goodwill, total 2.3 billion Canadian dollars; that's more than the CA$1.9 billion that Aphria has after factoring out its goodwill. Both companies also have large global footprints, so combining could not just expand their total global footprint, bring economies of scale, potentially bringing down costs in areas where they both operate. | Aurora and Aphria There were already rumors circulating around a possible merger involving Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) earlier this year. Aphria's market cap of $1.3 billion and Aurora's valuation of just over $1 billion would make the combined company significantly larger than the total value of the now-abandoned Harvest-Verano merger. Trulieve's market cap is $2.3 billion and Curaleaf is valued at $4.3 billion, making this an even larger potential deal than a merger involving Aphria and Aurora. | Aurora and Aphria There were already rumors circulating around a possible merger involving Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) earlier this year. Aurora has generated CA$306 million in revenue over the past four quarters, while Aphria has reported CA$543 million. Trulieve's market cap is $2.3 billion and Curaleaf is valued at $4.3 billion, making this an even larger potential deal than a merger involving Aphria and Aurora. |
37315.0 | 2020-08-27 00:00:00 UTC | Better Marijuana Stock: Canopy Growth vs. Aphria | ACB | https://www.nasdaq.com/articles/better-marijuana-stock%3A-canopy-growth-vs.-aphria-2020-08-27 | nan | nan | During the coronavirus pandemic, many U.S. locales deemed cannabis an essential item, and the resultant surge in sales brought revenue pouring in for several marijuana companies. But the same can't be said about the Canadian market. While that country also declared cannabis essential, changes in consumer sentiment, supply challenges, and consumers pivoting toward the illicit market were among the reasons revenue growth slowed north of the border.
That said, revenue does seem to be rising for two Canadian pot companies: Canopy Growth (NYSE: CGC) and Aphria (NASDAQ: APHA). And while shares of these two companies have fallen by 20% and 12.2%, respectively, so far this year, both are actually doing a little better than the benchmark Horizons Marijuana Life Sciences ETF's decline of 25%.
Profitability, leadership teams, and balance-sheet strength are just some of the factors investors should consider when choosing between these two marijuana stocks.
The case for Canopy Growth
Canopy -- the owner of cannabis brands Tweed and Tokyo Smoke -- became a favorite among investors when it landed a partnership deal with beverage giant Constellation Brands (NYSE: STZ) in 2017 to expand the base of its cannabidiol (CBD) products in the U.S.
But last year brought a decline in revenue, and the company failed to earn a profit. This has been taking a toll on the stock price, and while things are improving somewhat thanks to a slight surge in sales, Canopy Growth has yet to record positive earnings before income, tax, depreciation, and amortization (EBITDA). That said, in its first quarter of fiscal 2021, ended June 30, revenue did grow by 22% annually to $110 million Canadian dollars, owing to higher medical cannabis sales in Canada and Germany.
Sequential growth from the prior quarter, however, was a mere 2%, and revenue from the Canadian recreational market sank 11% to CA$44.2 million, challenged by the pandemic-era retail operating environment.
First-quarter results failed to impress investors largely because they included another EBITDA loss. When CEO David Klein took the reins in January after serving as Constellation Brands' CFO, investors hoped he would help to tighten Canopy's cost structure, as higher expenses were blamed for the lack of profit. A positive EBITDA would show that the company was capably managing operating expenses.
The new CEO did announce some cost-cutting measures in April, including exiting operations in South Africa and Lesotho; closing some facilities in Canada, Colombia, and New York; and eliminating 85 full-time positions. What's worrisome is that despite these changes, selling, general, and administrative (SG&A) expenses were down by just CA$10.3 million in Q1 (to CA$135.4 million).
However, thanks to Constellation's decision to exercise its warrants in May and increase its stake in the company, Canopy's cash position remains strong. It has CA$2 billion in cash, cash equivalents, and marketable securities on the books as of the end of Q1. Ever since its initial investment of CA$245 million in 2017, Constellation has been consistently increasing its stake in Canopy, a sign of the faith it has in the company's growth.
Image source: Getty Images.
The case for Aphria
A good C-suite leadership team is crucial in a growing industry. Canopy Growth acknowledged this when it gave the reins to Klein from former CEO Bruce Linton, and it's a similar story at Aurora Cannabis (NYSE: ACB), whose former CEO, Terry Booth, stepped down in February. The news didn't go over well with investors; shares have lost 63% year to date.
ACB data by YCharts
And then there's Aphria, where the consistent performance can be attributed to its excellent leadership team under CEO Irwin Simon.
Simon started with Aphria as the independent chair of its board of directors in late 2018 and took over the role of interim CEO in March 2019. Before that, Simon founded packaged-foods company Hain Celestial and ran it for 25 years.
Simon's main objective since joining Aphria has been to focus on the company's core market in Canada. Its asset-light approach has worked well -- unlike some peers, it hasn't burned through cash with aggressive acquisitions. It has reported five quarters of consistent positive EBITDA, including the most recent fourth quarter, reported July 29. The company also managed to move from the No. 2 to the No. 1 position in Canada in terms of adult-use gross revenue, with 26.7% sequential growth.
For the fourth quarter ended May 31, adjusted EBITDA of CA$8.6 million was up 49% from CA$5.7 million in the year-ago quarter. Higher adult-use revenue and an increase in gross profits of 32%, to CA$47.3 million, drove the EBITDA increase.
Aphria's strength lies in its adult-use segment, which made up 86% of net revenue in Q4, but it also benefits from a medical cannabis business that's widely spread over Canada, Europe, Africa, South America, and Oceania. Its Germany-based subsidiary, CC Pharma, saw a 12% sequential increase in medical cannabis sales in Q4.
Net revenue came in at $152 million, up 18% from the year-ago quarter and 5% from the third quarter of 2020. CA$65.4 million of that came from cannabis products (13% from medical, 86.5% from recreational, and 0.5% from wholesale), and CA$99.1 million came from distribution revenue (CA$97 million from CC Pharma and CA$2 million from other distribution companies). The company paid CA$12.3 million in excise taxes.
SG&A expenses were up 94% to CA$116.6 million; that number included $64 million of non-cash impairment charges related to changes the company made in its international operations. According to management, its businesses in Jamaica, Lesotho, and Colombia were particularly affected by the COVID-19 pandemic, costing more in capital expenditures. This resulted in a net loss of $98.8 million in the quarter, but I wouldn't fret -- these are one-time charges. They affected the recent share-price performance, no doubt, but they don't dent the company's long-term potential.
So far in August, Canopy, Aurora, and Aphria's shares have declined by 6.8%, 8.2%, and 4%, respectively, while the industry benchmark Horizons Marijuana Life Sciences ETF's has fallen by 7%.
ACB data by YCharts
CEOs who run a tight ship create companies that do remarkably well -- which is evident in Aphria's profit numbers and rising revenue. It also boasts CA$497.2 million in cash and cash equivalents, which it plans to put toward both domestic and international growth.
Which should you choose?
Both Canopy and Aphria are good marijuana stocks, no doubt, with tremendous growth potential. But given a choice between these two, I would go with Aphria. The main differentiator here is Canopy's lack of profitability, which could continue to weigh in on its stock price.
Moreover, Aphria has enjoyed steady success under Simon, and there's no guarantee of the same under Canopy's new CEO -- Klein's expertise in the consumer packaged goods and beverages industry may or may not be a large benefit for Canopy, and while his tighter expense structure may work in the long run, that could take awhile. Meanwhile, losses are mounting for now.
For its part, Aphria has remained consistently profitable by focusing on its core operations in Canada. The company has a strong balance sheet to not only survive the crisis, but thrive afterward -- making it the better cannabis pick for 2020.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
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Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canopy Growth acknowledged this when it gave the reins to Klein from former CEO Bruce Linton, and it's a similar story at Aurora Cannabis (NYSE: ACB), whose former CEO, Terry Booth, stepped down in February. ACB data by YCharts And then there's Aphria, where the consistent performance can be attributed to its excellent leadership team under CEO Irwin Simon. ACB data by YCharts CEOs who run a tight ship create companies that do remarkably well -- which is evident in Aphria's profit numbers and rising revenue. | Canopy Growth acknowledged this when it gave the reins to Klein from former CEO Bruce Linton, and it's a similar story at Aurora Cannabis (NYSE: ACB), whose former CEO, Terry Booth, stepped down in February. ACB data by YCharts And then there's Aphria, where the consistent performance can be attributed to its excellent leadership team under CEO Irwin Simon. ACB data by YCharts CEOs who run a tight ship create companies that do remarkably well -- which is evident in Aphria's profit numbers and rising revenue. | Canopy Growth acknowledged this when it gave the reins to Klein from former CEO Bruce Linton, and it's a similar story at Aurora Cannabis (NYSE: ACB), whose former CEO, Terry Booth, stepped down in February. ACB data by YCharts And then there's Aphria, where the consistent performance can be attributed to its excellent leadership team under CEO Irwin Simon. ACB data by YCharts CEOs who run a tight ship create companies that do remarkably well -- which is evident in Aphria's profit numbers and rising revenue. | Canopy Growth acknowledged this when it gave the reins to Klein from former CEO Bruce Linton, and it's a similar story at Aurora Cannabis (NYSE: ACB), whose former CEO, Terry Booth, stepped down in February. ACB data by YCharts And then there's Aphria, where the consistent performance can be attributed to its excellent leadership team under CEO Irwin Simon. ACB data by YCharts CEOs who run a tight ship create companies that do remarkably well -- which is evident in Aphria's profit numbers and rising revenue. |
37316.0 | 2020-08-27 00:00:00 UTC | These Popular Robinhood Stocks May Lose 50% (or More) of Their Value | ACB | https://www.nasdaq.com/articles/these-popular-robinhood-stocks-may-lose-50-or-more-of-their-value-2020-08-27 | nan | nan | What a year it's been for Wall Street. Panic and uncertainty surrounding the coronavirus disease 2019 (COVID-19) pandemic sent equities to their fastest and steepest bear market decline in history during the first quarter. But records were broken on the way back up, too, with the benchmark S&P 500 taking less than five months to reclaim fresh all-time highs.
Though volatility can be scary, it's almost always a welcome sight for long-term investors. That's because it allows patient investors to buy into high-quality companies at a perceived discount.
Image source: Getty Images.
However, volatility also attracts inexperienced investors who hope to make a quick buck in the stock market. Rarely, if ever, does the short-term strategy of chasing volatility via penny stocks work out well.
Take online investment platform Robinhood. Known best for offering free trades and gifting a small parcel of stock to users when they open accounts, Robinhood has primarily attracted millennial and/or novice investors. A quick glance at the online platform's leaderboard (i.e., the stocks most-held by members) is telling. Though you'll find a few high-quality long-term holdings, penny stocks and generally awful companies seem to satisfy many Robinhood investors.
There are three exceptionally popular holdings on Robinhood in particular that could lose 50% or more of their value.
A Tesla Model S plugged in for charging. Image source: Tesla.
Tesla
Although it's possibly the hottest stock on Wall Street at the moment, and it's the eighth-most-held one on Robinhood, electric-vehicle (EV) maker Tesla (NASDAQ: TSLA) has a mind-boggling valuation.
There are reasons for investors to be optimistic about Tesla. The company has surpassed delivery expectations in 2020 thus far. CEO Elon Musk is highly motivated and vested in the company's future, owning roughly 21% of Tesla's outstanding shares. It certainly doesn't hurt that Tesla caters to a more affluent group of auto buyers who are less likely to alter their consumption habits during economic hiccups.
But if you ask me if this group of catalysts is worth a $382 billion market cap, my answer is a resounding no.
What we've witnessed from Tesla in 2020 is a complete wipeout of what had been an unrelenting short position in the company. We've also seen short-term investors piling into the stock because they fear missing out. Even the company's announced 5-for-1 stock split has added almost 50% to its share price. None of these catalysts has any true fundamental bearing on Tesla.
Tesla has managed to create a mass-produced EV, and at one time it had early-mover advantage in this space. However, the gap in battery performance between Tesla and its peers has shrunk. Numerous well-funded competitors with decades of history behind their brands are now producing high-performance EVs. In 2018, Ford announced plans to invest $11 billion in EVs by 2022, while General Motors offered plans this March to spend $20 billion on EVs and autonomous vehicles through 2025. In other words, Tesla's runway is getting awfully crowded.
Emotional investing has proved time and again that it can only carry a company's valuation so far, and Tesla's share price could be significantly lower over the next six to 24 months.
Image source: American Airlines.
American Airlines Group
Another very popular Robinhood stock that could face some serious future downside is American Airlines Group (NASDAQ: AAL).
Whereas Tesla has a feel-good story behind its ascension, it's unclear why Robinhood investors have anointed American Airlines as the fifth-most-held stock on the platform. It may look "cheap" simply because its share price has retreated to nearly an eight-year low, but there's pretty much nothing redeeming about airline stocks -- and especially American Airlines -- at the moment.
The obvious knock against the airline industry is that we have no clue when passengers are going to return to the skies at pre-pandemic levels. A coronavirus vaccine may encourage travelers to start flying again, but it could be years before we have any semblance of normalcy for airlines. That's a big problem for a capital-intensive, low-margin industry that simply cannot sustain losses for long periods.
With regard to American Airlines, it's been able to raise cash through debt offerings. While this staves off any near-term possibility of bankruptcy, it's also ballooned the company's total debt to $40 billion. Even if American Airlines pulls through this pandemic without having to reorganize under the protection of bankruptcy, its interest payments are going to eat up a substantial portion of its operating income for a long time to come.
Plus, the financial aid American Airlines received as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act means no more share buybacks or dividends for shareholders. The company's capital return program was arguably the only reason to even consider owning American Airlines, and now it's gone.
With no guarantees that American Airlines even survives the pandemic without seeking bankruptcy protection, I believe it's fair to say that its stock could still have significant downside.
Image source: Getty Images.
Aurora Cannabis
A 50% decline might also await Canadian licensed marijuana producer Aurora Cannabis (NYSE: ACB). Aurora was actually the most-held stock on Robinhood for months, until a 1-for-12 reverse split in May apparently liquidated the holdings of any members with fewer than 12 shares prior to the split. Nowadays, it's the 11th-most-held company.
I imagine it's probably a bit of a head-scratcher as to why a fast-growing marijuana stock would even make this list. The answer to that question is twofold.
On a macro level, Canada was widely expected to lead the world with its legalization of adult-use weed in October 2018. However, Health Canada delayed the launch of high-margin derivative products by a couple of months. Meanwhile, regulators in select provinces have struggled to review and assign dispensary store licenses. These issues mean that Aurora Cannabis has had to deal with supply shortages in some provinces and major bottlenecks in others.
On a company-specific basis, Aurora has partially come to terms with its problems. A revamped management team has slashed costs and reworked its debt covenant to the point that the company may not default later this year. To avoid default, Aurora must produce positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by fiscal Q1 2021.
However, Aurora Cannabis' cash position is still a concern, and the company has had few avenues with which to raise capital beyond selling common stock. Aurora has been a serial diluter of its shareholders over the past four years.
What's more, the company is lugging around $2.42 billion Canadian in goodwill. Aurora grossly overpaid for most of its acquisitions and will likely be required to take multiple writedowns in the foreseeable future. These impairment charges could be the catalyst that pulls the rug out from beneath the company's shareholders.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis A 50% decline might also await Canadian licensed marijuana producer Aurora Cannabis (NYSE: ACB). Panic and uncertainty surrounding the coronavirus disease 2019 (COVID-19) pandemic sent equities to their fastest and steepest bear market decline in history during the first quarter. Known best for offering free trades and gifting a small parcel of stock to users when they open accounts, Robinhood has primarily attracted millennial and/or novice investors. | Aurora Cannabis A 50% decline might also await Canadian licensed marijuana producer Aurora Cannabis (NYSE: ACB). Though you'll find a few high-quality long-term holdings, penny stocks and generally awful companies seem to satisfy many Robinhood investors. American Airlines Group Another very popular Robinhood stock that could face some serious future downside is American Airlines Group (NASDAQ: AAL). | Aurora Cannabis A 50% decline might also await Canadian licensed marijuana producer Aurora Cannabis (NYSE: ACB). Tesla Although it's possibly the hottest stock on Wall Street at the moment, and it's the eighth-most-held one on Robinhood, electric-vehicle (EV) maker Tesla (NASDAQ: TSLA) has a mind-boggling valuation. American Airlines Group Another very popular Robinhood stock that could face some serious future downside is American Airlines Group (NASDAQ: AAL). | Aurora Cannabis A 50% decline might also await Canadian licensed marijuana producer Aurora Cannabis (NYSE: ACB). Image source: American Airlines. The company's capital return program was arguably the only reason to even consider owning American Airlines, and now it's gone. |
37317.0 | 2020-08-24 00:00:00 UTC | TSX rises on gains in energy firms, COVID-19 treatment hopes | ACB | https://www.nasdaq.com/articles/tsx-rises-on-gains-in-energy-firms-covid-19-treatment-hopes-2020-08-24 | nan | nan | Aug 24 (Reuters) - Canada's main stock index advanced on Monday as energy shares rose on firmer oil prices, with signs of progress in COVID-19 treatment efforts bolstering sentiment.
* The energy sector .SPTTEN climbed 1.4% as U.S. crude CLc1 prices were up 0.4% a barrel, while Brent crude LCOc1 added 0.8% as storms closed in on the Gulf of Mexico, shutting more than half of the region's oil production. O/R * U.S. President Donald Trump on Sunday hailed the Food and Drug Administration's authorization of a coronavirus treatment that uses blood plasma from recovered patients
* At 9:37 a.m. ET (13:37 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 82.74 points, or 0.5%, at 16,600.59.
* The financials sector .SPTTFS gained 0.8%, while the industrials sector .GSPTTIN rose 0.5%.
* The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, added 0.2%, even as gold futures GCc1 fell 0.3% to $1,929.6 an ounce. GOL/
* On the TSX, 154 issues were higher, while 59 issues declined for a 2.61-to-1 ratio favouring gainers, with 8.74 million shares traded.
* The largest percentage gainer on the TSX was Ballard Power Systems Inc , which jumped 5.3% after brokerage Bernstein started coverage of the stock with an "outperform" rating.
* Its gains were followed by Pason Systems Inc , which rose 3.9% after RBC assumed coverage of the oil and gas services provider with a "sector perform" rating.
* Pot producer Aurora Cannabis Inc fell 2.1%, the most on the TSX, and the second-biggest decliner was Aurinia Pharmaceuticals Inc , down 1.4%.
* The most heavily traded shares by volume were NextSource Materials Inc , Northern Dynasty Minerals Ltd and Just Energy Group Inc .
* The TSX posted seven new 52-week highs and no new lows.
* Across all Canadian issues there were 43 new 52-week highs and eight new lows, with total volume of 25.26 million shares.
(Reporting by Amal S in Bengaluru; Editing by Aditya Soni)
((Amal.S@thomsonreuters.com; within U.S.+1 646 223 8780; outside U.S. +91 80 6749 3677;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aug 24 (Reuters) - Canada's main stock index advanced on Monday as energy shares rose on firmer oil prices, with signs of progress in COVID-19 treatment efforts bolstering sentiment. O/R * U.S. President Donald Trump on Sunday hailed the Food and Drug Administration's authorization of a coronavirus treatment that uses blood plasma from recovered patients * At 9:37 a.m. * The largest percentage gainer on the TSX was Ballard Power Systems Inc , which jumped 5.3% after brokerage Bernstein started coverage of the stock with an "outperform" rating. | Aug 24 (Reuters) - Canada's main stock index advanced on Monday as energy shares rose on firmer oil prices, with signs of progress in COVID-19 treatment efforts bolstering sentiment. * The energy sector .SPTTEN climbed 1.4% as U.S. crude CLc1 prices were up 0.4% a barrel, while Brent crude LCOc1 added 0.8% as storms closed in on the Gulf of Mexico, shutting more than half of the region's oil production. GOL/ * On the TSX, 154 issues were higher, while 59 issues declined for a 2.61-to-1 ratio favouring gainers, with 8.74 million shares traded. | Aug 24 (Reuters) - Canada's main stock index advanced on Monday as energy shares rose on firmer oil prices, with signs of progress in COVID-19 treatment efforts bolstering sentiment. * The energy sector .SPTTEN climbed 1.4% as U.S. crude CLc1 prices were up 0.4% a barrel, while Brent crude LCOc1 added 0.8% as storms closed in on the Gulf of Mexico, shutting more than half of the region's oil production. GOL/ * On the TSX, 154 issues were higher, while 59 issues declined for a 2.61-to-1 ratio favouring gainers, with 8.74 million shares traded. | GOL/ * On the TSX, 154 issues were higher, while 59 issues declined for a 2.61-to-1 ratio favouring gainers, with 8.74 million shares traded. * Its gains were followed by Pason Systems Inc , which rose 3.9% after RBC assumed coverage of the oil and gas services provider with a "sector perform" rating. * The most heavily traded shares by volume were NextSource Materials Inc , Northern Dynasty Minerals Ltd and Just Energy Group Inc . |
37318.0 | 2020-08-23 00:00:00 UTC | How Close Are Aurora Cannabis and Canopy Growth to Turning a Profit? | ACB | https://www.nasdaq.com/articles/how-close-are-aurora-cannabis-and-canopy-growth-to-turning-a-profit-2020-08-23 | nan | nan | Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) have some bragging rights. They're two of the biggest Canadian cannabis producers. Both companies target popular recreational marijuana markets in their home country of Canada. Both are major players in the important German medical cannabis market.
But there's one glaring thing that neither Aurora nor Canopy can boast about -- achieving consistent profitability. It's a goal to which both cannabis companies aspire. So how close are Aurora and Canopy to turning a profit?
Image source: Getty Images.
Where they are now
Let's first examine how far each of these companies is from generating consistent profits. Right now, it's not a pretty picture.
For the quarter ending March 31, 2020, Aurora Cannabis posted a net loss of 137.4 million in Canadian dollars. That loss would have been even worse were it not for a positive impact from income tax recoveries.
Canopy Growth's bottom line didn't look much better in its results for its fiscal year 2021 first quarter, which ended on June 30, 2020. The company reported a net loss of CA$128.3 million, although this result was better than expected.
Are the companies at least moving in the right direction? Yes, but it's in large part because both Aurora and Canopy have gotten past some massive inventory and goodwill writedowns. To be fair, though, Aurora and Canopy have also reduced their spending significantly.
Paths to profitability
Those spending cuts are critical for Aurora and Canopy to achieve profitability. But will they be enough?
Aurora Cannabis Chief Financial Officer Glen Ibbott hinted in the company's Q3 conference call that more spending reductions would be on the way. The company indeed brought the hammer down in June, announcing immediate cuts of 25% in its sales, general, and administrative staff. Aurora also said it would cut production staff by around 30% over the next two quarters.
Ibbott said that Aurora remained on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first quarter of fiscal 2021, which ends on Sept. 30, 2020. This is notable. When Aurora's executives talk about profitability, they're usually referring to delivering positive adjusted EBITDA rather than positive net income.
The company's path to profitability doesn't rely entirely on its cost-cutting. Aurora also needs Canadian recreational marijuana, international medical cannabis, and international hemp CBD markets to grow.
It's a similar story for Canopy. The cannabis producer has reduced staffing by 18% since December 2019. This includes significant cuts to Canopy's global operations. Like Aurora, though, Canopy needs growth in Canada -- especially with the "Cannabis 2.0" derivatives market -- along with international growth to have a shot at profitability.
Guesstimates
My view is that Aurora will probably hit its goal of generating positive adjusted EBITDA in Q1 of fiscal 2021. The restructuring of its debt covenants earlier this year requires the milestone to be met. I expect that interim CEO Michael Singer will do whatever it takes to avoid violating the terms of the covenant.
Canopy Growth CEO David Klein was brought on board to get the company on a clear path to profitability. The company's strong cash position gives him more leeway than Singer has at Aurora, but there still might be more staffing cuts in the coming months.
My best guess is that Canopy won't turn a profit until sometime in 2022 at the earliest. Aurora's more urgent (and more drastic) cost-cutting could enable it to become truly profitable on the bottom line somewhat sooner.
However, these are only estimates. There are way too many variables for the cannabis industry, which could make the path to profitability a slippery one for both companies.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) have some bragging rights. Aurora Cannabis Chief Financial Officer Glen Ibbott hinted in the company's Q3 conference call that more spending reductions would be on the way. Ibbott said that Aurora remained on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first quarter of fiscal 2021, which ends on Sept. 30, 2020. | Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) have some bragging rights. For the quarter ending March 31, 2020, Aurora Cannabis posted a net loss of 137.4 million in Canadian dollars. Aurora also needs Canadian recreational marijuana, international medical cannabis, and international hemp CBD markets to grow. | Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) have some bragging rights. Paths to profitability Those spending cuts are critical for Aurora and Canopy to achieve profitability. When Aurora's executives talk about profitability, they're usually referring to delivering positive adjusted EBITDA rather than positive net income. | Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) have some bragging rights. Canopy Growth's bottom line didn't look much better in its results for its fiscal year 2021 first quarter, which ended on June 30, 2020. Paths to profitability Those spending cuts are critical for Aurora and Canopy to achieve profitability. |
37319.0 | 2020-08-22 00:00:00 UTC | 2 Reasons I Still Have Faith in Canopy Growth | ACB | https://www.nasdaq.com/articles/2-reasons-i-still-have-faith-in-canopy-growth-2020-08-22 | nan | nan | The marijuana sector hasn't lost too much steam in the face of the coronavirus pandemic. Sales are on the rise as cannabis products behave more like consumer goods -- demand has been regular and reliable. Some U.S. cannabis companies have even managed to achieve profitability from bumps in revenue. Their Canadian counterparts, however, have yet to achieve this, facing growth an illicit cannabis market, regulatory delays, and other roadblocks. One such pot company is Canada-based Canopy Growth (NYSE: CGC), which boasts the industry's largest market cap of $6.2 billion.
Results from its fiscal first quarter of 2021, which ended June 30, didn't tell the story investors were hoping for. Canopy's shares have fallen about 24% so far this year, in tandem with the Horizons Marijuana Life Sciences ETF. Canopy took cost-cutting measures to reduce cash burn during the quarter, but they weren't enough to turn a profit.
But we should keep an eye on the bright side. The first quarter wasn't all bad -- there are a few factors keeping the hope alive for Canopy.
Image source: Getty Images.
First, the tough news from Q1
Canopy Growth made its name in the cannabis space after Canada legalized medical marijuana. Medical marijuana was technically legalized in 2001, but Canada's federal courts only meaningfully liberated the market in 2016. Canopy's popular marijuana products are sold there under brand names like Tweed, Tokyo Smoke, and Spectrum Therapeutics. After its fourth-quarter 2020 results failed to impress, hopes were high for these products in the first quarter of 2021.
Year-over-year revenue for the first quarter grew 22% to 110 million Canadian dollars. This was only a 2% increase from Q4 2020. Upticks in medical-marijuana sales in Canada and Germany likely constitute the boosts. The benefits of its C3 business, acquired in April 2019, and This Works, acquired in May 2019, were also reflected in the quarter. But once you exclude the sales from these acquisitions, net sales growth was a mere 9%.
Investors should also note the recreational sales dip in Canopy Growth's home country. Canadian recreational net revenue slumped 11% to CA$44.2 million, which the company attributed to challenges in the retail environment amid the coronavirus pandemic. Meanwhile, international medical marijuana revenue showed robust growth by 92% to CA$20.2 million from the year-prior period.
An adjusted EBITDA rang in at CA$92 million compared to CA$93 million in the year-ago quarter. EBITDA is an important measure of profitability, which implies how well a company is handling its operating expenses. Despite reducing total operating expenses by 23% to CA$178 million, Canopy's EBITDA losses continued.
Canopy Growth isn't alone in its struggles. Peer Aurora Cannabis (NYSE: ACB) is also trying to reduce its operating expenses to achieve positive EBITDA by the first quarter of fiscal 2021. Cost-cutting measures include closing down unprofitable facilities and shifting capital toward profitable ones. We will know more about how its strategies have played out when the company releases earnings on Sept. 25.
ACB data by YCharts
The good news on cash positioning
Canopy highlighted its good cash position at the end of Q1, with CA$2 billion in cash, cash equivalents, and marketable securities. Its cash position was protected because Constellation Brands (NYSE: STZ) exercised its warrants in May, investing another CA$245 million in the company. Both companies agreed on a strategic partnership with an initial investment of CA$245 million in October 2017. In November 2018, Constellation invested another CA$5 billion in Canopy Growth, which has helped the company continue to maintain its aggressive acquisition strategy. Canopy's management believes its Canadian business does not require additional cultivation assets, and expects to do more of its spending on its American business.
Constellation's increased stake in Canopy Growth is a sign that the beverage giant has faith in the company's profitability potential. Constellation's support is also one of the reasons why Canopy has been able to survive the ups and downs the industry faced last year, which included a slump in revenue, regulatory delays, and black-market challenges. The financial backup should help Canopy battle through the rest of the year.
Image source: Getty Images.
The even better news on Canopy's expanding markets
Canopy's endeavors to establish a footprint in the U.S. CBD (cannabidiol) market are also commendable. The U.S. hemp-derived CBD market could grow to $1.3 billion by 2022, according to estimates by New Frontier Data. The Farm Bill legalized all CBD products derived from hemp that contain no more than 0.3% tetrahydrocannabinol (THC) in Dec. 2018. However, marijuana is still illegal under federal law.
Canopy is working with retailers to expand the distribution of ready-to-drink non-CBD hydration sports drinks in key U.S. markets. Canopy purchased a 72% stake in BioSteel Sports Nutrition Company, a nutritional company popular with some American athletes, in October 2019. BioSteel recently earned a key partnership with the Brooklyn Nets and was duly dubbed, "The Official Sports Drink of Barclays Center."
Another positive in the quarterly results is the burgeoning potential of Canopy's cannabis derivatives products. This category includes vapes, edibles, concentrates, and beverages. These types of products were legalized in October 2019 as part of "Cannabis 2.0" legalization, which expanded the list of forms of recreational marijuana that could be brought to market. Just before Q1, Canopy launched a variety of vape products, chocolates, and cannabis-infused beverages. These recreational derivatives products alone contributed to 13% of total Canada business-to-business sales in Q1.
Despite the supply challenges faced during the pandemic, Canopy has shipped over 1.2 million cannabis beverage units since late March. The products included four THC-infused ready-to-drink beverage lines under the Tweed, Houseplant, and Deep Space brands. These high-margin products could be vital to the company's long-term growth. Management expects them to help push Canopy's gross margin past 40%.
These moves point to Canopy becoming the top cannabis beverage company in Canada. Constellation Brands' market presence should also help expand distribution and boost sales for beverage products. The New York-based company has built its reputation through its Corona Extra and Modelo beers as well as wine and spirit-based drinks.
Canopy Growth's cost-cutting efforts, growth strategies, innovative derivative products, and financial partner in Constellation Brands could help the company recover in 2020. If the estimates for the growth of cannabis products are correct, it could -- that's right, could -- achieve profitability in the near future.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Peer Aurora Cannabis (NYSE: ACB) is also trying to reduce its operating expenses to achieve positive EBITDA by the first quarter of fiscal 2021. ACB data by YCharts The good news on cash positioning Canopy highlighted its good cash position at the end of Q1, with CA$2 billion in cash, cash equivalents, and marketable securities. Canadian recreational net revenue slumped 11% to CA$44.2 million, which the company attributed to challenges in the retail environment amid the coronavirus pandemic. | ACB data by YCharts The good news on cash positioning Canopy highlighted its good cash position at the end of Q1, with CA$2 billion in cash, cash equivalents, and marketable securities. Peer Aurora Cannabis (NYSE: ACB) is also trying to reduce its operating expenses to achieve positive EBITDA by the first quarter of fiscal 2021. Canadian recreational net revenue slumped 11% to CA$44.2 million, which the company attributed to challenges in the retail environment amid the coronavirus pandemic. | ACB data by YCharts The good news on cash positioning Canopy highlighted its good cash position at the end of Q1, with CA$2 billion in cash, cash equivalents, and marketable securities. Peer Aurora Cannabis (NYSE: ACB) is also trying to reduce its operating expenses to achieve positive EBITDA by the first quarter of fiscal 2021. Constellation's increased stake in Canopy Growth is a sign that the beverage giant has faith in the company's profitability potential. | Peer Aurora Cannabis (NYSE: ACB) is also trying to reduce its operating expenses to achieve positive EBITDA by the first quarter of fiscal 2021. ACB data by YCharts The good news on cash positioning Canopy highlighted its good cash position at the end of Q1, with CA$2 billion in cash, cash equivalents, and marketable securities. Some U.S. cannabis companies have even managed to achieve profitability from bumps in revenue. |
37320.0 | 2020-08-21 00:00:00 UTC | 7 Marijuana Stocks to Buy As the Industry Continues to Grow | ACB | https://www.nasdaq.com/articles/7-marijuana-stocks-to-buy-as-the-industry-continues-to-grow-2020-08-21 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Finding the best marijuana stocks to buy isn’t an easy task. However, despite having generally under performed, many still have a lot of potential.
While differing regulations across jurisdictions and borders have hampered near-term growth, the global legal marijuana market is still forecast to reach $73.6 billion by 2027, according to market research by Grand View Research Inc.
That equates to a compound annual growth rate (CAGR) of 18% in each of the next seven years. The continued legalization of both medical and recreational marijuana in the U.S. and abroad is expected to propel the industry higher. This means there will still be promising marijuana stocks to buy as several should rise in coming years. While the road ahead might be volatile, there’s no doubting the potential growth that is waiting to be unlocked in marijuana stocks for long-term investors.
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Here are seven marijuana stocks that investors shouldn’t overlook:
Canopy Growth (NYSE:CGC)
Tilray (NASDAQ:TLRY)
Aurora Cannabis (NYSE:ACB)
Aphria (NASDAQ:APHA)
GrowGeneration (NASDAQ:GRWG)
Cronos Group (NASDAQ:CRON)
Hexo (NYSE:HEXO)
Let’s take a look at what makes each among the best marijuana stocks to buy now.
Marijuana Stocks to Buy: Canopy Growth (CGC)
Source: Shutterstock
We’ll start with the largest marijuana company by market capitalization, Canopy Growth. Being the biggest player in the recreational marijuana space has made Canopy Growth vulnerable to the industry’s growing pains over the past few years.
Earlier in 2020, the Canadian-based company reported a whopping 1.3 billion CAD loss for its fiscal fourth quarter, announced the layoff of 500 staff members and closed two of its largest greenhouses where it grows marijuana. The company also scrapped plans to open a new third greenhouse. Additionally, Canopy Growth has endured a lot of changeover among its executive ranks and board of directors. The Chief Executive Officer, Chief Operating Officer and Chief Commercial Officer have each changed in the past year.
All the turmoil has wreaked havoc with CGC stock, which is 41% below its 52-week high at $16.92 a share. Yet, there is reason to be optimistic about Canopy Growth’s future prospects.
The company’s most recent fiscal first quarter results were much improved, demand for recreational marijuana has risen since the novel coronavirus pandemic brought life as we know it to a halt, and Canopy Growth is cash rich, having 2 billion CAD in reserves. These facts mean that Canopy Growth is more resilient than many smaller marijuana companies and capable of withstanding the industry’s ups and downs. The company has also seen an upswing in its medical marijuana sales and recently launched a new U.S. focused e-commerce website called ShopCanopy.com that gave its shares a boost.
Investors can expect that Canopy Growth will find its footing and that its share price will appreciate in time. As such, it remains one of the key marijuana stocks to buy.
Tilray (TLRY)
TLRY) logo on a web browser" width="300" height="169">
Source: Jarretera / Shutterstock.com
Like most marijuana companies, Tilray has seen its stock get beat up over the past year. In fact, TLRY stock has fallen 85% in the past 12 months and is now trading at just over $7 a share.
However, investors playing the long game should look at Tilray stock as a buying opportunity at current valuations. On Aug. 10, Tilray released its second-quarter results that were downright scary. From April 1 through to June 30, the company lost $81.7 million, a 125% increase from the $36.3 million loss reported in the same period of 2019. Sales across all business segments, including hemp products, rose by only 10% year-over-year in the second quarter to $50.4 million. The poor results sent investors fleeing and TLRY stock fell 13% the next day.
However, it’s not all bad for Tilray. Investors looking for a silver lining can take comfort from the fact that sales from the company’s international segment, while totaling only $8.3 million, were up 349% from the second quarter of 2019, and medical marijuana sales also jumped in the most recent quarter. Also, Tilray has a product line that is more diverse than many marijuana companies, focusing on recreational and medical products, as well as hemp.
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It all bodes well for the company’s long-term prospects. Plus, much of the second quarter loss can be attributed to one-time, non-recurring charges and a one time inventory write down. TLRY stock may surprise on the upside in the coming months.
Aurora Cannabis (ACB)
ACB) logo on a web page" width="300" height="169">
Source: Jarretera / Shutterstock.com
Aurora Cannabis’ stock been a real yo-yo. The price of ACB stock had grown nearly 250% between 2015 and when Canada officially legalized marijuana use throughout the country in 2018. However, the share price then fell 91% from its record high of $128.27 on poor earnings and a lack of demand for legal marijuana products.
But after reporting better than expected quarterly results this spring, the price of ACB stock jumped 200% in one week to $17.40 a share. Sadly, the stock has fallen again in recent months and now trades just under $10 per share. So what to make of this extremely volatile stock and the company behind it?
Like many marijuana producers, Aurora Cannabis has struggled with fluctuating demand and struggled to manage its inventory. The company has closed five of its production facilities and sold off its largest greenhouse that had one million square feet of production space. Aurora Cannabis has also halted construction on two other production facilities that had been in the works. With scaled down operations, Aurora Cannabis has forecast that it will post an operating profit by the first quarter of 2021. Time will tell if the company succeeds, but investors may want to consider grabbing ACB shares before they jump higher — again.
Aphria (APHA)
APHA) marijuana product" width="300" height="169">
Source: Shutterstock
Not only is Aphria one of the largest marijuana companies with a market capitalization of $1.30 billion, but the company’s stock is outperforming the broader sector. Since August 2019, APHA stock is down 25% to $4.63 a share, compared with a decline of 52% for the Horizons Marijuana Life Sciences ETF, which is widely used by analysts as an industry benchmark. There’s reason to be bullish on Aphria, which is doing better today than many of its peers.
Aphria is moving aggressively into the cannabis derivative market that includes edible products, and is also focusing on vape products, where it is currently the market leader. Also, Aphria is ranked No. 1 in the adult-use recreational cannabis market in Canada, where the drug is 100% legal in all jurisdictions. And, Aphria is also having success expanding into Europe, notably Germany, due to several strategic acquisitions.
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Put it all together and it’s easy to see that APHA stock has a lot of potential upside, which makes it one of the more promising marijuana stocks to buy now.
GrowGeneration (GRWG)
Source: Shutterstock
Now for a marijuana stock that has been crushing it lately. On Aug. 13, GRWG stock was trading at $9.88 per share. In the last five trading days, the stock price has more than doubled (up 123%) to $22.02. The stunning jump has been due to the fact that the company’s sales grew more than 100% in the second quarter on strong demand for its hydroponic and gardening products that are used by marijuana growers large and small.
While GrowGeneration’s shares trade at 156 times expected earnings, the current share price could be justified if the company can maintain its current sales momentum and meet its ambitious growth projections. Chief Executive Officer Darren Lampert is confident, noting that his company is well-positioned to capitalize on a multi-billion dollar industry that is still in its infancy. If he’s right, and GrowGeneration can continue supplying marijuana growers with the equipment needed to cultivate the plant, then GRWG stock may be cheap at its current level.
Cronos Group (CRON)
Source: Shutterstock
As a marijuana producer, Cronos Group is vulnerable to the challenges that have plagued the entire industry in the U.S. and Canada. Covid-19 related store closures, inconsistent regulations and government red tape, and a strong black market have conspired to hurt Cronos Group’s sales and growth. For the second quarter, the company reported an operating loss of $31.3 million, compared to a loss of $16.8 million in the year earlier period. The news sent CRON stock down 16% recently, and it currently trades at $5.44 a share.
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Despite the struggles, Cronos Group is well positioned to ride out the current turmoil and stay afloat until it can find firmer footing. The company ended the second quarter with more than $1.3 billion in cash and investments, which is more than most of its competitors. Equally positive, Cronos Group has almost no debt and there are signs that the entire marijuana market might be bottoming. Nowhere left to go but up — fingers crossed.
Hexo (HEXO)
Source: Shutterstock
Now we’re firmly into penny stock territory as Hexo’s share price is currently under $1 at just 72 cents per share. HEXO stock has been more beat up than most marijuana companies. In 2019, it was trading at nearly $8 per share. The sharp decline has come after Hexo’s marijuana infused beverages — it has a strategic partnership with beer maker Molson Coors (NYSE:TAP) — failed to takeoff as hoped. Staff layoffs and production facility closures have followed.
But to its credit, Hexo has been working to diversify its offerings, selling a range of marijuana products such as cannabis oils, sub-lingual sprays, marijuana powder and dried flowers. Also, Hexo operates and sells in marijuana markets around the world, even Israel. This diversification offers a glimmer of hope for the battered HEXO stock and its shareholders.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. As of this writing, Joel Baglole did not own any of the aforementioned stocks.
The post 7 Marijuana Stocks to Buy As the Industry Continues to Grow appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | 6 International Stocks to Buy for Impressive Returns Now Here are seven marijuana stocks that investors shouldn’t overlook: Canopy Growth (NYSE:CGC) Tilray (NASDAQ:TLRY) Aurora Cannabis (NYSE:ACB) Aphria (NASDAQ:APHA) GrowGeneration (NASDAQ:GRWG) Cronos Group (NASDAQ:CRON) Hexo (NYSE:HEXO) Let’s take a look at what makes each among the best marijuana stocks to buy now. Aurora Cannabis (ACB) ACB) logo on a web page" width="300" height="169"> Source: Jarretera / Shutterstock.com Aurora Cannabis’ stock been a real yo-yo. The price of ACB stock had grown nearly 250% between 2015 and when Canada officially legalized marijuana use throughout the country in 2018. | 6 International Stocks to Buy for Impressive Returns Now Here are seven marijuana stocks that investors shouldn’t overlook: Canopy Growth (NYSE:CGC) Tilray (NASDAQ:TLRY) Aurora Cannabis (NYSE:ACB) Aphria (NASDAQ:APHA) GrowGeneration (NASDAQ:GRWG) Cronos Group (NASDAQ:CRON) Hexo (NYSE:HEXO) Let’s take a look at what makes each among the best marijuana stocks to buy now. Aurora Cannabis (ACB) ACB) logo on a web page" width="300" height="169"> Source: Jarretera / Shutterstock.com Aurora Cannabis’ stock been a real yo-yo. The price of ACB stock had grown nearly 250% between 2015 and when Canada officially legalized marijuana use throughout the country in 2018. | 6 International Stocks to Buy for Impressive Returns Now Here are seven marijuana stocks that investors shouldn’t overlook: Canopy Growth (NYSE:CGC) Tilray (NASDAQ:TLRY) Aurora Cannabis (NYSE:ACB) Aphria (NASDAQ:APHA) GrowGeneration (NASDAQ:GRWG) Cronos Group (NASDAQ:CRON) Hexo (NYSE:HEXO) Let’s take a look at what makes each among the best marijuana stocks to buy now. Aurora Cannabis (ACB) ACB) logo on a web page" width="300" height="169"> Source: Jarretera / Shutterstock.com Aurora Cannabis’ stock been a real yo-yo. The price of ACB stock had grown nearly 250% between 2015 and when Canada officially legalized marijuana use throughout the country in 2018. | 6 International Stocks to Buy for Impressive Returns Now Here are seven marijuana stocks that investors shouldn’t overlook: Canopy Growth (NYSE:CGC) Tilray (NASDAQ:TLRY) Aurora Cannabis (NYSE:ACB) Aphria (NASDAQ:APHA) GrowGeneration (NASDAQ:GRWG) Cronos Group (NASDAQ:CRON) Hexo (NYSE:HEXO) Let’s take a look at what makes each among the best marijuana stocks to buy now. Aurora Cannabis (ACB) ACB) logo on a web page" width="300" height="169"> Source: Jarretera / Shutterstock.com Aurora Cannabis’ stock been a real yo-yo. The price of ACB stock had grown nearly 250% between 2015 and when Canada officially legalized marijuana use throughout the country in 2018. |
37321.0 | 2020-08-21 00:00:00 UTC | Aurora Cannabis Releases Q4 Results Next Month. Here are 4 Things to Watch | ACB | https://www.nasdaq.com/articles/aurora-cannabis-releases-q4-results-next-month.-here-are-4-things-to-watch-2020-08-21 | nan | nan | Cannabis giant Aurora Cannabis (NYSE: ACB) hasn't announced a date for its fourth-quarter earnings release just yet, but it will likely arrive in September, as it did last year. It'll be an important finish to what's been a challenging year for the Alberta, Canada-based cannabis producer, which continues to incur operating losses every quarter while struggling to generate consistent sales growth. It'll also be an important segue into fiscal 2021, and a chance for investors to see whether the company is making improvements and strengthening its financials.
In just the past year, Aurora's shares are down more than 85%; the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) is down just 57%, which is still far below the S&P 500's positive 15% returns during the same period. For the stock to turn its fortunes around, investors are going to need to see some significant improvements. Here are four items to keep an eye on when the company releases its upcoming results:
1. EBITDA
All eyes will be on Aurora's earnings before interest, taxes, depreciation, and amortization (EBITDA) number when the company reports earnings. That's because management has projected that by the first quarter of fiscal 2021, its adjusted EBITDA will be positive. As recently as June 23, Aurora assured investors it was still on track to reach that goal.
It will be an important milestone for the company, one that could help signify stability in the business once and for all. In its third-quarter results, released May 14 for the period ending March 31, Aurora reported an adjusted EBITDA loss of 50.9 million Canadian dollars. And while that was an improvement from its second-quarter loss of CA$80.2 million, it was worse than what it reported in the same period last year, when Aurora's adjusted EBITDA was negative CA$36.6 million.
Image source: Getty Images.
EBITDA is an important number that can track a company's performance better than typical accounting income, which includes non-cash items like depreciation and amortization that can weigh down results and paint a much worse financial picture overall.
2. Sales growth
The next number investors should focus on is sales. A big problem for Aurora is that the company's top line hasn't always been consistent. In the third quarter, sales of CA$75.5 million represented a 35% increase over a soft second-quarter performance that was weighed down by revenue provisions, returns, and adjustments totaling CA$10.6 million. The growth simply brought the company back to where it was a couple of quarters ago, when it reported net revenue of CA$75.2 million. In essence, Aurora has shown little to no growth over the past couple of quarters -- and while making progress toward positive EBITDA is important, sales growth is what gets cannabis investors excited. It could be hard to convince investors to buy shares of the company without stronger sales numbers.
3. Margins
When reviewing Aurora's financials, investors shouldn't overlook gross margins. To have a realistic shot at a positive EBITDA number, the company's gross margins need to be strong. But the concern is that many cannabis companies in Canada are being more aggressive on price in an effort to squeeze out the black market and gain more market share. And while that may help sales growth, it could negatively affect gross margins, leaving less money to cover overhead and other operating expenses.
In Q3, Aurora's gross margin before fair-value adjustments was 42.2% of net revenue, down from a gross margin of 55.6% in the prior-year period. A focus on pushing its new value brand, Daily Special, could help generate sales growth, but it could also bring the company's margins down. And that could be a telltale sign that Aurora's financials may not be improving, even if its sales numbers are getting stronger.
4. Cash burn
How much money Aurora's burning through is another important consideration. Earlier this year, investment bank Ello Capital estimated the cannabis producer only had a few months of liquidity left. And while the company's still around, so too are questions surrounding its sustainability. In Q3, Aurora used CA$58.7 million to fund its operating activities, slightly up from CA$54.7 million during the same period a year ago. But for the trailing nine months, it spent CA$288.3 million on its day-to-day operations, compared with CA$187.6 million a year ago.
Aurora needs to improve its rate of cash burn -- and ideally be generating positive cash flow from its operations -- to help minimize investor concerns about the business' long-term viability.
There's no single number investors should focus on
It may be tempting to say that Aurora's sales were up, or it made progress on EBITDA, so the company's headed in the right direction. But the truth is that investors need to look at all four of the items listed above, as together they'll provide a complete picture of how the business is doing. Sales growth means little if the margins are getting smaller, which, in turn, will impact EBITDA. And even if the first three items on this list look great, it could all be for naught if Aurora's burning through more cash and in danger of running out of money.
Right now, there are many question marks surrounding Aurora's future and how competitive it will be. And without good numbers across all four of the items listed above, I wouldn't consider investing in the pot stock, regardless of how good any one particular number looks.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Cannabis giant Aurora Cannabis (NYSE: ACB) hasn't announced a date for its fourth-quarter earnings release just yet, but it will likely arrive in September, as it did last year. It'll be an important finish to what's been a challenging year for the Alberta, Canada-based cannabis producer, which continues to incur operating losses every quarter while struggling to generate consistent sales growth. In just the past year, Aurora's shares are down more than 85%; the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) is down just 57%, which is still far below the S&P 500's positive 15% returns during the same period. | Cannabis giant Aurora Cannabis (NYSE: ACB) hasn't announced a date for its fourth-quarter earnings release just yet, but it will likely arrive in September, as it did last year. In its third-quarter results, released May 14 for the period ending March 31, Aurora reported an adjusted EBITDA loss of 50.9 million Canadian dollars. And while that was an improvement from its second-quarter loss of CA$80.2 million, it was worse than what it reported in the same period last year, when Aurora's adjusted EBITDA was negative CA$36.6 million. | Cannabis giant Aurora Cannabis (NYSE: ACB) hasn't announced a date for its fourth-quarter earnings release just yet, but it will likely arrive in September, as it did last year. And while that was an improvement from its second-quarter loss of CA$80.2 million, it was worse than what it reported in the same period last year, when Aurora's adjusted EBITDA was negative CA$36.6 million. In essence, Aurora has shown little to no growth over the past couple of quarters -- and while making progress toward positive EBITDA is important, sales growth is what gets cannabis investors excited. | Cannabis giant Aurora Cannabis (NYSE: ACB) hasn't announced a date for its fourth-quarter earnings release just yet, but it will likely arrive in September, as it did last year. Sales growth The next number investors should focus on is sales. In essence, Aurora has shown little to no growth over the past couple of quarters -- and while making progress toward positive EBITDA is important, sales growth is what gets cannabis investors excited. |
37322.0 | 2020-08-19 00:00:00 UTC | Don’t Buy Aurora Cannabis Stock Until These 2 Things Happen | ACB | https://www.nasdaq.com/articles/dont-buy-aurora-cannabis-stock-until-these-2-things-happen-2020-08-19 | nan | nan | If popularity translated to solid performance in the stock market, Aurora Cannabis (NYSE: ACB) would be one of the best marijuana-related investments around. The pot grower has been a regular on the list of the 100 most popular stocks on the trading app Robinhood, but the notoriety hasn't helped its business. Over the past year, the company's market cap and stock price have both declined by more than 75%. In all fairness, the entire marijuana industry has struggled and even the top dogs are anxiously awaiting better days.
The market for cannabis will expand significantly if more countries opt to legalize recreational use of marijuana for adults. Aurora Cannabis stands firmly in a position to benefit from such a situation. Of course, a legalization scenario in the United States is far from guaranteed. Still, the sector has made | If popularity translated to solid performance in the stock market, Aurora Cannabis (NYSE: ACB) would be one of the best marijuana-related investments around. The pot grower has been a regular on the list of the 100 most popular stocks on the trading app Robinhood, but the notoriety hasn't helped its business. In all fairness, the entire marijuana industry has struggled and even the top dogs are anxiously awaiting better days. | If popularity translated to solid performance in the stock market, Aurora Cannabis (NYSE: ACB) would be one of the best marijuana-related investments around. The pot grower has been a regular on the list of the 100 most popular stocks on the trading app Robinhood, but the notoriety hasn't helped its business. Aurora Cannabis stands firmly in a position to benefit from such a situation. | If popularity translated to solid performance in the stock market, Aurora Cannabis (NYSE: ACB) would be one of the best marijuana-related investments around. The market for cannabis will expand significantly if more countries opt to legalize recreational use of marijuana for adults. Still, the sector has made | If popularity translated to solid performance in the stock market, Aurora Cannabis (NYSE: ACB) would be one of the best marijuana-related investments around. The pot grower has been a regular on the list of the 100 most popular stocks on the trading app Robinhood, but the notoriety hasn't helped its business. Over the past year, the company's market cap and stock price have both declined by more than 75%. |
37323.0 | 2020-08-19 00:00:00 UTC | The 1 Aurora Cannabis Number You Can't Trust | ACB | https://www.nasdaq.com/articles/the-1-aurora-cannabis-number-you-cant-trust-2020-08-19 | nan | nan | Marijuana is projected to be one of the fastest-growing industries this decade. With tens of billions of dollars being sold annually in the North American black market, it might be only a matter of time before illicit consumers begin moving toward legal channels in select U.S. states and in Canada. To date, two-thirds of U.S. states have waved the green flag on cannabis in some capacity. Canada was the first industrialized country to legalize weed for adult use back in October 2018.
If there's one thing high-growth industries are good at, it's attracting investment dollars. Perhaps no marijuana stock has done a better job of that than Alberta-based Aurora Cannabis (NYSE: ACB).
Image source: Getty Images.
The complete package?
On paper, Aurora Cannabis looks like a bit of a dream stock. It's slated to be one of the top cultivators in Canada and has been regularly outproducing its peers. Although Canopy Growth is a bit secretive about its output, Aurora is transparent, having produced 36,207 kilos of cannabis in the fiscal third quarter ended in March. At this pace, Aurora would deliver around 145,000 kilos of marijuana each year, with other growing facilities waiting in the wings to be ramped up.
That's another key point of the Aurora allure: the size of the company's cultivating facilities. The Aurora Sky facility is a roughly 800,000-square-foot facility that's up and running. Aurora Nordic 2 in Denmark and Aurora Sun in Alberta chime in with 1 million square feet and 1.62 million square feet of growing space respectively. Though construction at Aurora Nordic 2 and Aurora Sun is on hold, the potential to use economies of scale to Aurora's advantage could push cash cost to produce per gram of dried cannabis sold well below the $0.85 Canadian ($0.64 U.S.) reported in the fiscal third quarter.
Aurora's investor following is also attracted to the company's international ties. Whether through production, partnerships, research, or exports, Aurora has access to approximately two dozen markets outside of Canada. Mind you, this also includes the U.S. market following the acquisition of cannabidiol (CBD)-based product developer Reliva.
But you can't believe everything you see when it comes to Aurora Cannabis.
Image source: Getty Images.
Don't be duped by Aurora's book value
There's one number that diligent investors are bound to come across during their research, and to put things plainly, it's highly misleading. I'm talking about Aurora Cannabis' book value.
Generally speaking, growth investors don't pay a whole lot of attention to book value, as they're more focused on sales growth and the push toward positive earnings before interest, taxes, depreciation, and amortization (EBITDA). But with Aurora Cannabis having fallen more than 90% in the past 17 months, some have suggested that Aurora is a value stock based on its price-to-book value.
Based on the company's reverse-split-adjusted book value of CA$35.80 ($27.15 U.S.), Aurora is currently trading at roughly 37% of its fiscal Q3 shareholder equity. Bargain, right?
Not so fast.
Many of the figures that went into calculating Aurora's shareholder equity might as well be plucked from thin air; there's little guarantee that they will hold up over time. It's unlikely, for instance, that CA$2.42 billion in goodwill is going to be recouped at some point in the future. This CA$2.42 billion accounts for more than half of the company's total assets, with approximately CA$2 billion of this goodwill derived from Aurora's acquisition of MedReleaf in July 2018.
Image source: Getty Images.
Without beating around the cannabis bush, the MedReleaf deal was the worst acquisition in cannabis' admittedly short history. MedReleaf's 55,000-square-foot Markham facility was part of five smaller grow farms that Aurora Cannabis recently shuttered to conserve its capital and lower costs. Meanwhile, the 1-million-square-foot Exeter greenhouse that was recently sold was never retrofitted for its projected 105,000 kilos of annual marijuana output. This means Aurora ponied up CA$2.64 billion in an all-stock deal for just a 210,000-square foot production facility capable of 28,000 kilos a year in output and a handful of MedReleaf's proprietary brands in return. There's no chance Aurora is going to recoup CA$2 billion in goodwill from this deal, leading me to believe that somewhere around three-quarters of its existing goodwill could eventually be written down.
The company will also have to deal with revaluing its property, plant, and equipment. Remember, since the end of March, it sold the Exeter facility for roughly a third of what MedReleaf paid for it in April 2018 and announced that it would be closing five of its smaller grow farms. That's six of its 15 facilities now off the grid, with two of its largest projects in limbo due to regulatory issues in Canada. There's absolutely no way that Aurora's property, plant, and equipment are worth anywhere close to the CA$1.05 billion value they held on March 31.
Even the company's intangible assets and/or inventory could face a future impairment. New store openings in Ontario may provide a path for Aurora to sell down its more than CA$251 million in cannabis inventory as of March 31. But we've consistently witnessed more production than demand for multiple quarters. That's a recipe for a writedown.
You might see a marijuana stock that's trading at 37% of its book value. I see a company whose book value absolutely can't be trusted as a viable metric.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Perhaps no marijuana stock has done a better job of that than Alberta-based Aurora Cannabis (NYSE: ACB). With tens of billions of dollars being sold annually in the North American black market, it might be only a matter of time before illicit consumers begin moving toward legal channels in select U.S. states and in Canada. Don't be duped by Aurora's book value There's one number that diligent investors are bound to come across during their research, and to put things plainly, it's highly misleading. | Perhaps no marijuana stock has done a better job of that than Alberta-based Aurora Cannabis (NYSE: ACB). Aurora Nordic 2 in Denmark and Aurora Sun in Alberta chime in with 1 million square feet and 1.62 million square feet of growing space respectively. This CA$2.42 billion accounts for more than half of the company's total assets, with approximately CA$2 billion of this goodwill derived from Aurora's acquisition of MedReleaf in July 2018. | Perhaps no marijuana stock has done a better job of that than Alberta-based Aurora Cannabis (NYSE: ACB). Though construction at Aurora Nordic 2 and Aurora Sun is on hold, the potential to use economies of scale to Aurora's advantage could push cash cost to produce per gram of dried cannabis sold well below the $0.85 Canadian ($0.64 U.S.) reported in the fiscal third quarter. But with Aurora Cannabis having fallen more than 90% in the past 17 months, some have suggested that Aurora is a value stock based on its price-to-book value. | Perhaps no marijuana stock has done a better job of that than Alberta-based Aurora Cannabis (NYSE: ACB). But you can't believe everything you see when it comes to Aurora Cannabis. You might see a marijuana stock that's trading at 37% of its book value. |
37324.0 | 2020-08-13 00:00:00 UTC | Can These Once-Hot Pot Stocks Recover? | ACB | https://www.nasdaq.com/articles/can-these-once-hot-pot-stocks-recover-2020-08-13 | nan | nan | When Canada legalized recreational marijuana in 2018, three stocks came to dominate the market: Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), and Canopy Growth (NYSE: CGC). All three had already established their names in the medical cannabis space, so recreational pot legalization just gave them more scope.
However, external headwinds and a few internal mistakes led to huge losses for these companies last year. "Cannabis 2.0," the second wave of recreational cannabis legalization in October 2019 (including vapes, edibles, beverages, concentrates, and more), sparked some hope -- but issues remained as product launches took time and the coronavirus pandemic hit.
The situation is tough for these companies, but they seem to be making efforts to recover. Is there any hope for these pot stocks in 2020?
Image source: Getty Images.
Aurora Cannabis is going all-in this year
Stock dilution is usually not seen as a good sign, because it reduces the value of an investment. But Aurora Cannabis had no other option but to execute a reverse stock split in May to save itself from being delisted from the New York Stock Exchange (NYSE) when its shares fell below $1, the NYSE standard trading price. Unlike its peers, Aurora hasn't been able to bag a partnership deal with a strong consumer company; instead, it has been adopting various cost-cutting strategies to save cash.
It has shut down five of its smaller facilities and merged a few of them in Canada, while ramping up operations in its Nordic facility in Europe. The company expects these moves to reduce its operating expenses enough to achieve positive EBITDA (earnings before interest, taxes, depreciation, and amortization) by the first quarter of fiscal 2021, ending in September.
As I discussed earlier, Aurora's chances of recovery will depend on key markets like the U.S., where growth is evident. We will know more about how Aurora's strategies are working out when it releases its fourth-quarter results, expected on Sept. 25.
Hexo needs to be careful
An NYSE listing warning in April after its stock, too, fell below $1 put HEXO in a spot. It, too, had no option but to use stock dilution to raise capital. It also sold its Niagara, Ontario, facility, for $10.2 million Canadian dollars. The intention was to focus on profitable operations, including an expansion of its Belleville, Ontario, location.
The company had CA$95.3 million in cash, cash equivalents, and short-term investments at the end of the third quarter. It also managed some additional financing of CA$50 million.
Its net revenue (minus excise taxes) grew 70% year over year to CA$22.1 million. But EBITDA losses came in at CA$4.3 million in Q3. The good news is, that's an improvement from losses of CA$8.5 million in Q3 2019. Hexo hopes to achieve positive EBITDA by the first half of fiscal 2021, which will depend on the impact of the pandemic on the company's operations, store rollouts, and customer demand.
Its performance seems to be on track for now. HEXO has made its way into a new market via its partnership with Israeli medical cannabis producer Breath of Life International, and into the U.S CBD (cannabidiol) market through its partnership with Molson Coors Beverage Company.
My only worry is that HEXO has been leaning way too much toward stock dilution, which doesn't help shareholders in the long run. The company's shares are down 54.8% year to date, while Aurora's and Canopy's stock prices have also fallen by 60.5% and 15%, respectively. Meanwhile, the market as tracked by the SPDR S&P 500 ETF is up by 4.2%.
ACB data by YCharts
Canopy Growth is on the right track
Canopy Growth is doing everything right. It has a secure balance sheet and a strong partnership with Constellation Brands, which recently increased its stake in Canopy despite the latter's ongoing losses, showing its faith in both Canopy and the cannabis sector. The increased stake resulted in Canopy recording cash and short-term investments of CA$2 billion as of June 30, a pinch of good news in its fiscal first-quarter 2021 results, reported Aug. 10. The company also saw 22% growth in net revenue from the year-ago period, mainly driven by higher medical cannabis sales in Canada and Germany.
Its cannabis derivatives product launches -- including vapes, beverages, and chocolate products -- are also going according to plan. After receiving positive feedback about its few cannabis beverages, Canopy has now produced close to 1.2 million servings of its four ready-to-drink beverages under the Tweed, Houseplant, and Deep Space brands, according to its Q1 press release -- making it the No. 1 cannabis beverage company in Canada.
Especially with Constellation's help, Canopy can capture a good market share with its cannabis beverage products in the U.S.
What are the chances?
Chances are high that U.S. federal legalization of marijuana could happen by 2022, giving these three pot stocks better opportunities to expand their businesses in a booming market. The enthusiasm is evident in the states, like Illinois, that have most recently legalized cannabis and have seen tremendous growth this year, pushing U.S. cannabis companies' revenues sky-high. Their Canadian peers will also enjoy some of these gains if federal legalization sees daylight.
Financially, Canopy Growth is in a safe place and has more expansion ability. Its partnership with Acreage Holdings (which will happen after federal legalization passes in the U.S.) will also give it a wider footprint. HEXO is still a risky investment at the moment, as challenges remain. Aurora Cannabis's cost strategies to achieve profitability look compelling, but let me remind you it also has a reputation for missing its targets. That said, looking at the growth of the marijuana industry this year, it appears that Aurora Cannabis and Canopy Growth are better situated to recover, if their strategies work out.
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Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | When Canada legalized recreational marijuana in 2018, three stocks came to dominate the market: Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), and Canopy Growth (NYSE: CGC). ACB data by YCharts Canopy Growth is on the right track Canopy Growth is doing everything right. Unlike its peers, Aurora hasn't been able to bag a partnership deal with a strong consumer company; instead, it has been adopting various cost-cutting strategies to save cash. | When Canada legalized recreational marijuana in 2018, three stocks came to dominate the market: Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), and Canopy Growth (NYSE: CGC). ACB data by YCharts Canopy Growth is on the right track Canopy Growth is doing everything right. "Cannabis 2.0," the second wave of recreational cannabis legalization in October 2019 (including vapes, edibles, beverages, concentrates, and more), sparked some hope -- but issues remained as product launches took time and the coronavirus pandemic hit. | When Canada legalized recreational marijuana in 2018, three stocks came to dominate the market: Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), and Canopy Growth (NYSE: CGC). ACB data by YCharts Canopy Growth is on the right track Canopy Growth is doing everything right. The enthusiasm is evident in the states, like Illinois, that have most recently legalized cannabis and have seen tremendous growth this year, pushing U.S. cannabis companies' revenues sky-high. | When Canada legalized recreational marijuana in 2018, three stocks came to dominate the market: Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), and Canopy Growth (NYSE: CGC). ACB data by YCharts Canopy Growth is on the right track Canopy Growth is doing everything right. But EBITDA losses came in at CA$4.3 million in Q3. |
37325.0 | 2020-08-13 00:00:00 UTC | 5 Marijuana Stocks to Buy For A “Blue Wave” Election | ACB | https://www.nasdaq.com/articles/5-marijuana-stocks-to-buy-for-a-blue-wave-election-2020-08-13 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The entire stock market is looking to the 2020 U.S. Presidential Election for clues to how the next four years will play out. But this election is particularly important for a group of stocks that, under the right conditions, could soar to lofty new heights after the election: marijuana stocks.
The logic is fairly simple. The liberal platform is more supportive of widespread adoption and national legalization of cannabis than the conservative platform. But Democrats only control the House right now. Republicans control the Senate and the White House.
A “Blue Wave” in November — wherein Democrats seize control of the House, Senate and White House — would presumably lay a solid foundation for sweeping cannabis legislation reform, and ultimately, the national legalization of marijuana in the U.S.
If that does happen, marijuana stocks will soar, because many publicly listed marijuana companies are headquartered in Canada and waiting for nationwide legalization before expanding into the U.S. cannabis market, the largest in the world.
10 Small-Cap Stocks Ready to Become Large Caps
With that in mind, here’s 5 marijuana stocks to buy:
Canopy Growth (NYSE:CGC)
Aurora Cannabis (NYSE:ACB)
Cronos (NASDAQ:CRON)
OrganiGram (NASDAQ:OGI)
Aphria (NASDAQ:APHA)
Needless to say, marijuana investors will be watching the 2020 election very closely. Sweeping Democrat wins could spark this group back to their late 2018 highs.
Canopy Growth (CGC)
Source: Shutterstock
Canopy Growth is basically the Coca-Cola (NYSE:KO) of the cannabis market.
Canopy is the biggest player in the cannabis space, boasting the largest production capabilities, widest distribution and biggest retail footprint. Plus a ton of high-quality brands ranging across various product verticals and the biggest balance sheet in the industry, with ample firepower to acquire smaller brands and build out the product portfolio.
Canopy is, for all intents and purposes, the Coca-Cola of the sector.
And, as the Coca-Cola of the sector, Canopy Growth is set to win big if the U.S. does nationally legalize cannabis on the back of a Blue Wave in November, especially since the U.S. represents such a huge and largely untapped opportunity for the cannabis giant.
To that end, CGC stock is a great marijuana stock to buy if you’re betting on U.S. cannabis legalization.
Aurora Cannabis (ACB)
Source: Shutterstock
Ostensibly, Aurora Cannabis is one of the worst marijuana stocks in the market. One look at the ACB stock chart confirms as much. Shares have plunged from $100-plus prices back in March 2019 to $10 today.
But historical performance doesn’t reflect future results. And when it comes to ACB stock, the future is far brighter than the past.
Aurora is in the midst of a major turnaround centered on slimming the operating model, right-sizing operations, streamlining investments and focusing geographic operations, all in hopes of turning the volatile and unprofitable cannabis producer into a steady, stable and profitable company.
Early progress on this turnaround has been promising.
Last quarter, Aurora announced blockbuster results which comprised huge revenue growth, gross margin stabilization, adjusted loss compression and significant loss margin improvement. In late June, management gave a positive update on this turnaround, saying that costs continue to come out of the system and that margins continue to improve.
If management continues to execute and deliver results, then ACB stock will rebound with vigor from its presently depressed levels. That rebound will get a big boost if we do see a Blue Wave in November.
10 Small-Cap Stocks Ready to Become Large Caps
So in an everything-goes-right scenario, ACB stock could soar over the next six months.
Cronos (CRON)
Source: Shutterstock
There’s one big reason why Cronos is one of the best marijuana stocks to buy for long-term investors.
More specifically, there’s actually about 1.3 billion reasons, and that’s the $1.3 billion in cash and investments sitting on Cronos’ balance sheet.
Early on in the cannabis gold rush, Cronos scored a huge, multi-billion dollar investment from tobacco giant Altria (NYSE:MO). Much of that investment is still left on the balance sheet, giving Cronos ample firepower to invest in strategic long-term growth opportunities.
But more importantly, Altria isn’t going to let Cronos just wither and die. And Altria is an $80 billion tobacco behemoth that produces billions of dollars in free cash flow every year.
In essence, then, Cronos has almost unlimited firepower to throw at the cannabis market. What this does is guarantee Cronos a seat at the table. So long as the cannabis market does grow, Cronos will grow, too, alongside the market.
To that end, if you’re bullish on the global cannabis market, CRON stock is a solid pick.
OrganiGram (OGI)
Source: Shutterstock
One of the more speculative — and potentially explosive — marijuana stocks to buy for a Blue Wave catalyst is OrganiGram.
With a market cap of just $240 million, OrganiGram is one of the smaller publicly traded cannabis producers. Most of the well recognized players in this space trade at market caps of $1 billion or greater. More than that, OGI stock — at just 2.6-times next year’s sales — is also one of the cheapest cannabis stocks out there, according to YCharts.
In this sense, any positive catalyst could send OGI stock skyrocketing higher.
A Blue Wave in November could be that positive catalyst. So could rebounding demand on the back of more value-priced offerings, or new Recreational 2.0 products such as beverages, chocolate bars and vapes. So could narrowing losses on the back of deep expense cuts happening at the company today.
In other words, there are many catalysts on the horizon which could spark big gains in OGI stock over the next few quarters.
10 Small-Cap Stocks Ready to Become Large Caps
Yes this is still a very risky stock. Don’t buy it with your lunch money. But if you’re feeling a bit risk-tolerant and are bullish on a Blue Wave, OGI stock may offer you the most bang for your buck.
Aphria (APHA)
Source: Shutterstock
Last but certainly not least on this list of marijuana stocks to buy before the election is Aphria.
The bull thesis on APHA stock is simple. For all intents and purposes, Aphria is the strongest cannabis producer in the market today.
Across the cannabis industry today, there are some ugly financial patterns: sluggish and sometimes negative revenue growth, big gross margin erosion, widening losses.
You don’t see any of that over at Aphria.
Sluggish growth? Nope. Cannabis revenues rose 90% year-over-year last quarter. Huge revenue growth has been the trend all year long.
Eroding margins? Nope. Last quarter, adjusted cannabis margins came in at 52.9%, essentially flat year-over-year. Again, this has been the trend all year long. Strong margins north of 40%.
Widening losses? Again, nope. Last quarter, Aphria reported adjusted EBITDA of C$8.6 million. For the full year, adjusted EBITDA was C$17.2 million. Both are up huge year-over-year.
In other words, Aphria is sustaining huge growth, strong margins and steady profit growth, in an industry that’s broadly seeing none of that.
The implication of course, is that Aphria is the best-in-breed producer when it comes to cannabis companies — and that APHA stock is a compelling buy.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been recognized as one of the best stock pickers in the world by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long CGC.
The post 5 Marijuana Stocks to Buy For A “Blue Wave” Election appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | If management continues to execute and deliver results, then ACB stock will rebound with vigor from its presently depressed levels. 10 Small-Cap Stocks Ready to Become Large Caps With that in mind, here’s 5 marijuana stocks to buy: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) OrganiGram (NASDAQ:OGI) Aphria (NASDAQ:APHA) Needless to say, marijuana investors will be watching the 2020 election very closely. Aurora Cannabis (ACB) Source: Shutterstock Ostensibly, Aurora Cannabis is one of the worst marijuana stocks in the market. | 10 Small-Cap Stocks Ready to Become Large Caps With that in mind, here’s 5 marijuana stocks to buy: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) OrganiGram (NASDAQ:OGI) Aphria (NASDAQ:APHA) Needless to say, marijuana investors will be watching the 2020 election very closely. Aurora Cannabis (ACB) Source: Shutterstock Ostensibly, Aurora Cannabis is one of the worst marijuana stocks in the market. One look at the ACB stock chart confirms as much. | 10 Small-Cap Stocks Ready to Become Large Caps With that in mind, here’s 5 marijuana stocks to buy: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) OrganiGram (NASDAQ:OGI) Aphria (NASDAQ:APHA) Needless to say, marijuana investors will be watching the 2020 election very closely. Aurora Cannabis (ACB) Source: Shutterstock Ostensibly, Aurora Cannabis is one of the worst marijuana stocks in the market. One look at the ACB stock chart confirms as much. | 10 Small-Cap Stocks Ready to Become Large Caps With that in mind, here’s 5 marijuana stocks to buy: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) OrganiGram (NASDAQ:OGI) Aphria (NASDAQ:APHA) Needless to say, marijuana investors will be watching the 2020 election very closely. Aurora Cannabis (ACB) Source: Shutterstock Ostensibly, Aurora Cannabis is one of the worst marijuana stocks in the market. One look at the ACB stock chart confirms as much. |
37326.0 | 2020-08-12 00:00:00 UTC | Must-Watch Support for Canopy Growth Stock | ACB | https://www.nasdaq.com/articles/must-watch-support-for-canopy-growth-stock-2020-08-12 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Canopy Growth (NYSE:CGC) has been full of misdirection as of late. CGC stock was giving bulls a nice pre-earnings rally before a two-dip ahead of the release. Upon popping higher on earnings, the stock is once again moving lower. What gives?
Source: Shutterstock
Putting our finger on this one has been tough, as the cannabis group has struggled. Those struggles began before the novel coronavirus outbreak, and while the rest of the market has rebounded back to its highs — or in the case of the Nasdaq, exceeded those highs — cannabis stocks have struggled to gain traction.
Investors are hopeful that Canopy, which continues to lead the industry, will be able to lead the group higher. For that to happen, must-hold support has to stand strong, while upside resistance needs to be taken out.
Of course, if the latter doesn’t happen now, CGC stock will always have another shot at rallying. But investors have been patiently awaiting a move to the upside. Will they finally get it?
Trading CGC Stock
Click to Enlarge
Source: Chart courtesy of StockCharts.com
In the provided chart, one can see that Canopy stock dipped down to uptrend support for the third time in about a month. This came roughly two weeks before earnings.
7 Innovative Stocks to Buy That Are Pushing the Envelope
However, uptrend support (blue line) provided a strong bounce, with shares reversing higher and breaking out over the 20-day, 50-day, and 200-day moving averages just two days later.
Leading up to that move, the 200-day moving average had been acting as resistance. Now it was acting as support, as CGC stock kept trying to rotate up through $20. Incidentally, that area is roughly the gap-fill from May.
Enough of the history lesson — what now?
The post-earnings reaction was initially bullish, but Canopy continues to struggle with the 200-day moving average. Now uptrend support is back in play as shares dip again. Ultimately I want to see a move above this cluster of moving averages up toward $20. Longer term, a rotation over $20 would be even more encouraging.
However, uptrend support is key in my mind. This has been guiding the stock for about six weeks and a break of this level likely puts $16 in play. Below $16 and dare I say, $13 could be on the table.
There is a lot of chop in CGC stock right now, and we need some clarity before proceeding. That is, if one uses technicals in their trading.
Canopy Growth Remains a Long-Term Winner
When Canopy reported earnings earlier this week, shares popped on the top- and bottom-line beat. Revenue grew 22% year-over-year as the company expands its different growth channels.
From CEO David Klein, “We grew our revenue year-over-year and are seeing market share improvement, notably achieving number one market share in cannabis-infused beverages in the Canadian market.”
The company continues to expand its presence in the beverage market, shipping more than 1.2 million cans to Canadian provinces since launch. Its partner could be key in this endeavor. With Constellation Brands (NYSE:STZ) having a sizable stake in Canopy — and recently upping that stake by exercising existing warrants — beverages could be a lucrative growth market.
That becomes even more true should the U.S. market continue moving toward legalization. That is, at the federal level vs. state-by-state legalization. That outcome may be swayed by the 2020 election — something cannabis investors should keep an eye on.
In any regard, I will continue to stick with the long thesis on CGC stock. The company has branching businesses like medicinal and beverages to help diversify revenue. It is preparing for the budding business opportunities here in the U.S.
New management is making the right moves and improving Canopy’s efficiency, reducing cash burn and improving returns. Its partner in Constellation has given Canopy notable balance sheet strength, something that lacks in its peers like Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY).
In short, there are a lot of reasons to bet on this name if one is long-term bullish on cannabis. That said, we need to see support hold on the charts, otherwise this one could get worse before getting better.
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The post Must-Watch Support for Canopy Growth Stock appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Its partner in Constellation has given Canopy notable balance sheet strength, something that lacks in its peers like Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY). CGC stock was giving bulls a nice pre-earnings rally before a two-dip ahead of the release. 7 Innovative Stocks to Buy That Are Pushing the Envelope However, uptrend support (blue line) provided a strong bounce, with shares reversing higher and breaking out over the 20-day, 50-day, and 200-day moving averages just two days later. | Its partner in Constellation has given Canopy notable balance sheet strength, something that lacks in its peers like Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY). InvestorPlace - Stock Market News, Stock Advice & Trading Tips Canopy Growth (NYSE:CGC) has been full of misdirection as of late. Canopy Growth Remains a Long-Term Winner When Canopy reported earnings earlier this week, shares popped on the top- and bottom-line beat. | Its partner in Constellation has given Canopy notable balance sheet strength, something that lacks in its peers like Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY). InvestorPlace - Stock Market News, Stock Advice & Trading Tips Canopy Growth (NYSE:CGC) has been full of misdirection as of late. 7 Innovative Stocks to Buy That Are Pushing the Envelope However, uptrend support (blue line) provided a strong bounce, with shares reversing higher and breaking out over the 20-day, 50-day, and 200-day moving averages just two days later. | Its partner in Constellation has given Canopy notable balance sheet strength, something that lacks in its peers like Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY). Leading up to that move, the 200-day moving average had been acting as resistance. Now it was acting as support, as CGC stock kept trying to rotate up through $20. |
37327.0 | 2020-08-12 00:00:00 UTC | Is Aurora Cannabis the Best Pot Stock to Buy Now? | ACB | https://www.nasdaq.com/articles/is-aurora-cannabis-the-best-pot-stock-to-buy-now-2020-08-12 | nan | nan | Plagued by oversupply, inventory issues, store closures due to COVID-19, and restructuring woes, shares of Aurora Cannabis (NYSE: ACB) have suffered. The stock has fallen by nearly 90% in the span of a year, leaving many investors disappointed by what they once thought would be a high flyer. In fact, the company had to perform a 12-1 reverse stock split in May just to stay listed on the stock exchange. Many investors are now asking: "Will there ever be light at the end of the tunnel?"
Warren Buffett once said: "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." More often than not, heavy sell-offs create opportunities for courageous investors to buy stocks at rock-bottom prices and sell them at a higher price once the underlying business recovers. Today, let's look at why Aurora is a top pot stock that is trading at an enticing valuation.
Image source: Getty Images.
A recovery on the horizon
Aurora's biggest problem is its inability to accurately predict supply and demand dynamics in the Canadian pot sector. For example, the company has invested in multiple facilities that can collectively produce up to 150,000 kilograms of cannabis each year. However, in the third quarter of 2020, Aurora only sold about 13,000 kilograms of cannabis, amounting to an annual run rate of just 52,000 kilograms.
These problems are temporary and will likely be mitigated as the industry expands and demand picks up. In the third quarter ended March 31, Aurora's net sales were 78.4 million Canadian dollars, an increase of 18% compared to the second quarter of 2020. At the same time, the company's quarterly cash use decreased by about 43% compared to last year, to CA$154.6 million. The company still has about CA$230.2 million in cash to offset its losses from operations, though it may need to raise cash by the end of the year to stay afloat.
As economies around the world reopen, rebound in retail cannabis sales will be a significant driver of Aurora's growth going forward. Last November, the company opened its 11,000 square-foot flagship store in West Edmonton Mall, the biggest shopping mall in North America.
Additionally, the company is on track to achieve several ambitious goals. First, Aurora is projecting positive earnings before interest, taxes, depreciation, and amortization (EBITDA) by the first quarter of 2021. Second, the company anticipates keeping its adjusted gross margin above 50%. Third, Aurora's selling, general, and administrative expenses are expected to decline to between $40 million to $45 million next quarter as the company lays off employees and shuts down some of its offices. Finally, the company's capital expenditures will likely fall to under $25 million in the fourth quarter of 2020.
Will Aurora's stock rebound?
As of now, Aurora Cannabis is trading for roughly four times price-to-sales. If the company's production gap narrows, however, and achieves 150,000 kilograms per year in the amount of cannabis sold, then Aurora would become significantly undervalued. Assuming the company sells this amount of cannabis at a current price of CA$4.33 per gram, Aurora may bring in as much as CA$649.5 million per year in revenue. In this scenario, the company's price-to-sales valuation would be a meager 2.5.
In May, monthly sales in the Canadian cannabis market grew by 116% year over year, to CA$185.9 million, according to Statistics Canada. Hence, I think Aurora can sell what it harvests within a couple of years.
Also in May, Aurora acquired CBD company Reliva for $40 million in an all-stock deal to begin the first step in U.S. expansion. Last year, Reliva generated profits on an EBITDA basis and it carries no debt.
By 2022, the U.S. legal marijuana market is expected to reach anywhere between $3.5 billion to $12.3 billion. Therefore, Aurora would be able to benefit from the significant sector expansion happening in both countries. A key upcoming catalyst is the company's Q1 earnings report, where investors can see whether or not the company's achieved its aforementioned guidance of generating positive EBITDA. If this becomes a reality, then the company will not need to raise more cash from investors and alleviate the fears of more stock dilution.
While short-term woes may make the stock unattractive, the company has a bright future ahead. Hence, Aurora is a top pot stock to buy for investors who are in it for the long term.
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*Stock Advisor returns as of August 1, 2020
Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Plagued by oversupply, inventory issues, store closures due to COVID-19, and restructuring woes, shares of Aurora Cannabis (NYSE: ACB) have suffered. A recovery on the horizon Aurora's biggest problem is its inability to accurately predict supply and demand dynamics in the Canadian pot sector. If the company's production gap narrows, however, and achieves 150,000 kilograms per year in the amount of cannabis sold, then Aurora would become significantly undervalued. | Plagued by oversupply, inventory issues, store closures due to COVID-19, and restructuring woes, shares of Aurora Cannabis (NYSE: ACB) have suffered. In the third quarter ended March 31, Aurora's net sales were 78.4 million Canadian dollars, an increase of 18% compared to the second quarter of 2020. If the company's production gap narrows, however, and achieves 150,000 kilograms per year in the amount of cannabis sold, then Aurora would become significantly undervalued. | Plagued by oversupply, inventory issues, store closures due to COVID-19, and restructuring woes, shares of Aurora Cannabis (NYSE: ACB) have suffered. Assuming the company sells this amount of cannabis at a current price of CA$4.33 per gram, Aurora may bring in as much as CA$649.5 million per year in revenue. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! | Plagued by oversupply, inventory issues, store closures due to COVID-19, and restructuring woes, shares of Aurora Cannabis (NYSE: ACB) have suffered. At the same time, the company's quarterly cash use decreased by about 43% compared to last year, to CA$154.6 million. Assuming the company sells this amount of cannabis at a current price of CA$4.33 per gram, Aurora may bring in as much as CA$649.5 million per year in revenue. |
37328.0 | 2020-08-11 00:00:00 UTC | Cannabis industry readies for M&A after COVID-19 boosts weed demand | ACB | https://www.nasdaq.com/articles/cannabis-industry-readies-for-ma-after-covid-19-boosts-weed-demand-2020-08-11 | nan | nan | By Shariq Khan
Aug 11 (Reuters) - After nearly a year of next-to-no deal-making, cannabis companies are gearing up for mergers and acquisitions as realistic stock valuations and the prospect of U.S. legalization attract buyers to a sector that has been decimated by oversupply and other issues, executives and investors say.
Profitable cannabis companies want to buy their way into niche segments and expand their brands, betting that the November U.S. presidential election will lead to weed becoming legal across the United States. Distribution deals could also help companies reach consumers who have shown an increased appetite for pot products since the onset of the coronavirus pandemic.
Aphria Inc APHA.TO, one of Canada's largest producers, is open to making purchases if it adds a well-known consumer brand to its beverages portfolio or if it helps the company overcome a lack of chocolate production, CEO Irwin Simon told Reuters.
Canopy Growth Corp WEED.TO, the largest Canadian pot producer by market value, had about C$2 billion in cash at the end of June. The strong balance sheet allows it to pursue acquisitions and the current market conditions would provide frequent opportunities, a company spokesman said. Canopy is backed by Corona beer maker Constellation Brands Inc STZ.N.
ROCKY START
Since its peak in August 2018 in the run-up to Canada's legalization of recreational weed, cannabis stocks tracker MJ ETF MJ.N has dropped 70%. M&A fell 80% and capital raising slumped 70% to $2.71 billion through July 31, according to the Viridian cannabis deal tracker.
However, as pot demand surged in lockdowns, stock prices have recovered, raising prospects that funding will be available for some deals.
"You'll still see a lot of the same funding sources but they're going to be much more diligent and cautious with their dollar," said Avis Bulbulyan, CEO at cannabis consultancy Siva Enterprises.
All-stock deals are expected to be the trend, but companies with cash could also spend it on U.S. expansion after the election, Katie Ashton and Eric Berlin of the Chicago office of the Dentons law firm told Reuters in an email.
ALL EYES ON ELECTIONS
Scott Paterson, chairman of media company Miraculo Inc, says a Democratic victory would instantly set in motion significant expansion for U.S. multi-state operators. Canadian producers' cross-border ambitions also hinge on U.S. legalization, which Democratic candidate Joe Biden's base is seen advocating.
However, it could be another quarter before Canadian companies start making deals as they are still cleaning up their balance sheets, said Stuart Titus, CEO of Medical Marijuana Inc MJNA.PK.
Among those most pressed to sell, MedMen Enterprises Inc MMEN.CD and iAnthus Capital Holdings Inc IAN.CD, both restructuring to avoid bankruptcy, have valuable licenses and serve markets that can be new opportunities for buyers, Titus said.
MedMen and iAnthus did not respond to requests for comment.
New players that have been on the sidelines could also step in.
"When it becomes fully legal, expect 'Big Food' and 'Big Agra' to jump in, to a much greater extent than they have so far... they could try and develop their own name brands," said William Gay, a lawyer at Wilson Elser Moskowitz Edelman & Dicker LLP.
Cannabis M&A activity plunged this year Cannabis M&A activity plunged this yearhttps://tmsnrt.rs/2Ff9MN7
(Reporting by Shariq Khan in Bengaluru; Editing by Dan Grebler)
((Shariq.Khan@thomsonreuters.com; Within U.S.+1 646 223 8780, outside U.S. +91 80 6182 2681; Twitter: @shariqrtrs;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | By Shariq Khan Aug 11 (Reuters) - After nearly a year of next-to-no deal-making, cannabis companies are gearing up for mergers and acquisitions as realistic stock valuations and the prospect of U.S. legalization attract buyers to a sector that has been decimated by oversupply and other issues, executives and investors say. Aphria Inc APHA.TO, one of Canada's largest producers, is open to making purchases if it adds a well-known consumer brand to its beverages portfolio or if it helps the company overcome a lack of chocolate production, CEO Irwin Simon told Reuters. All-stock deals are expected to be the trend, but companies with cash could also spend it on U.S. expansion after the election, Katie Ashton and Eric Berlin of the Chicago office of the Dentons law firm told Reuters in an email. | Since its peak in August 2018 in the run-up to Canada's legalization of recreational weed, cannabis stocks tracker MJ ETF MJ.N has dropped 70%. However, it could be another quarter before Canadian companies start making deals as they are still cleaning up their balance sheets, said Stuart Titus, CEO of Medical Marijuana Inc MJNA.PK. Cannabis M&A activity plunged this year Cannabis M&A activity plunged this yearhttps://tmsnrt.rs/2Ff9MN7 (Reporting by Shariq Khan in Bengaluru; Editing by Dan Grebler) ((Shariq.Khan@thomsonreuters.com; Within U.S.+1 646 223 8780, outside U.S. +91 80 6182 2681; Twitter: @shariqrtrs;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | By Shariq Khan Aug 11 (Reuters) - After nearly a year of next-to-no deal-making, cannabis companies are gearing up for mergers and acquisitions as realistic stock valuations and the prospect of U.S. legalization attract buyers to a sector that has been decimated by oversupply and other issues, executives and investors say. Aphria Inc APHA.TO, one of Canada's largest producers, is open to making purchases if it adds a well-known consumer brand to its beverages portfolio or if it helps the company overcome a lack of chocolate production, CEO Irwin Simon told Reuters. Cannabis M&A activity plunged this year Cannabis M&A activity plunged this yearhttps://tmsnrt.rs/2Ff9MN7 (Reporting by Shariq Khan in Bengaluru; Editing by Dan Grebler) ((Shariq.Khan@thomsonreuters.com; Within U.S.+1 646 223 8780, outside U.S. +91 80 6182 2681; Twitter: @shariqrtrs;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | By Shariq Khan Aug 11 (Reuters) - After nearly a year of next-to-no deal-making, cannabis companies are gearing up for mergers and acquisitions as realistic stock valuations and the prospect of U.S. legalization attract buyers to a sector that has been decimated by oversupply and other issues, executives and investors say. Since its peak in August 2018 in the run-up to Canada's legalization of recreational weed, cannabis stocks tracker MJ ETF MJ.N has dropped 70%. M&A fell 80% and capital raising slumped 70% to $2.71 billion through July 31, according to the Viridian cannabis deal tracker. |
37329.0 | 2020-08-10 00:00:00 UTC | 5 Pre-Merger SPACs Worthy of Your Attention | ACB | https://www.nasdaq.com/articles/5-pre-merger-spacs-worthy-of-your-attention-2020-08-10 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
SPACs — special purpose acquisition companies — are very hot in the market these days. Recent SPAC mergers DraftKings (NASDAQ:DKNG) and Nikola (NASDAQ:NKLA) have done very well. With that in mind, I wanted to find five SPACs that have agreed to merge with a private company.
These deals should close and complete their reverse mergers sometime in the third or fourth quarter. Thereafter, the existing SPAC stock symbol will change into the symbol for the merged company.
By buying any of these pre-merger SPAC stocks, an investor can get in on the bottom floor, so to speak. The potential for huge upside profits, once the reverse merger goes into effect and the stock symbol changes, is very high.
Why Are SPACs So Hot?
One reason for this is because the general investing public tends to wait to buy these stocks until after the reverse merger. In some cases, investors are not aware that you can buy the SPAC stock first. In other cases, they are not aware of the newly public company until it starts trading under its own symbol.
These are considered reverse mergers, not IPOs. The reason is that the SPAC stock — the sponsor — has already had its IPO. In follow-on transactions, the sponsor issues shares to a private company. Often these private companies are owned by private equity funds.
However, the target company shareholders end up with most of the shares. In most cases, they obtain well over 80%-90% of the total shares. Therefore, the agreed merger deal allows their management and board to control the combined company.
Therefore, it is considered a “reverse” merger. The sponsor would normally control the shares and control the company’s board and management after the merger. But in these SPAC reverse mergers, the target company ends up in control of most of the shares, and the board. Moreover, it gets to control the cash that the SPAC raised in its IPO. So, by definition, the transaction is a reverse merger.
10 Small-Cap Stocks Ready to Become Large Caps
Here are five pre-merger SPACs to watch:
FinTech Acquisition Corp III (NASDAQ:FTAC)
Schultze Special Purpose Acquisition Corp (NASDAQ:SAMA)
DiamondPeak Holdings (NASDAQ:DPHC)
Churchill Capital III (NYSE:CCXX)
Spartan Energy Acquisition Corp (NYSE:SPAQ)
SPACs: FinTech Acquisition Corp III (FTAC)
Source: Wright Studio / Shutterstock.com
On Aug. 3, FTAC agreed to merge with Paya, an Atlanta-based payments company with $30 billion of transactions. The deal will have an implied enterprise value of $1.3 billion. The new symbol will be PAYA.
The agreed-upon transaction, which should close sometime in Q4, will include a $200 million capital raise called a private investment in public equity (PIPE). In addition, there will be $50 million from other large co-investors, and FTAC itself has $357 million. Therefore the new company will have $607 million, before transaction expenses.
Moreover, it turns out that Paya is controlled by a large private equity fund called GTCR. The PIPE investment will include other high-quality investment funds, such as Franklin Templeton (NYSE:BEN) and Wellington Management. The bottom line is that the public shareholders will own just 31% of the combined company. It will be lower after deal warrants are exercised. This low level of public ownership tends to push up SPACs.
In a slide presentation, Paya says it has the highest proportion, 85% of its total, of “card not present” (CNP) transaction volume in the industry. All online e-commerce transactions are CNP payments. Paya is well suited for the huge expected growth in internet sales by retailers.
Moreover, the deal is at 19.6 times EV to adjusted 2021 EBITDA. But its public peers trade on average at 26.2 times. Some are at 28 times. This implies that the stock could rise 38% to 47%.
But this is based on FTAC stock trading at its IPO price of $10. FTAC is now at $10.39. But it is potentially worth $13.80 to $14.70, based on the Paya presentation. Therefore, this SPAC looks to be at least 40% undervalued.
Schultze Special Purpose Acquisition (SAMA)
Source: Shutterstock
Schultze Special Purpose Acquisition Corp agreed on July 25 to merge with Clever Leaves, a Canadian cannabis company. Clever Leaves makes all its cannabis very cheaply in facilities in Colombia. That is its key selling point, as it drives its profit advantage, selling its product throughout the world. Clever Leaves says it can make cannabis at just 20 cents per gram, or 5% to 10% of the cost in Canada.
The reverse merger with SAMA stock will allow Clever Leaves to raise a net $111 million in cash and just $37 million in debt at an enterprise value of $255 million. Once the deal closes the new symbol will be CLVR.
SAMA stock, and CLVR after the merger, is very cheap. Here is why. First, the company’s slide presentation shows on page 22 that it expects by 2022 to have $140 million in revenue and $47 million in EBITDA.
Second, SAMA stock’s market capitalization, according to Yahoo! Finance, is $165 million. After the merger, there will be 32.9 million shares outstanding fully diluted. This puts Cleaver Leaves’ pro-forma market cap at $334.5 million, using today’s price of $10.17 for SAMA stock.
Third, the EV-sales ratio is cheap. For example, $334.5 million divided by $140 million in revenue implies the ratio is just 2.4 times.
Canadian pot stocks like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) trade at 3 times to 4 times 2021 expected revenue. Moreover, none of these companies are profitable yet, even on an EBITDA basis.
That means that SAMA stock is very cheap at today’s price. I expected it will rise 100%.
SPACs: DiamondPeak Holdings (DPHC)
Source: buffaloboy / Shutterstock.com
On Aug. 1, DiamondPeak Holdings agreed to merge with Lordstown Motors, an electric truck maker. The deal is expected to close in Q4, and once the reverse merger is final, the new symbol for Lordstown Motors will change to RIDE.
The deal ends up raising $675 million for Lordstown and it will be conducted at an enterprise value of $1.6 billion. This includes a PIPE deal for $500 million. General Motors (NYSE:GM) will invest $75 million of that $500 million. After all costs and debt repayments, the final amount that Lordstown receives is $675 million, including $280 million that DiamondPeak Holdings already has from its IPO.
Lordstown, as a private company, bought one of GM’s plants. It now has 27,000 orders, representing $1.4 billion of potential revenue, to make its electric Endurance pickup truck. Lordstown claims its EV truck will get 75 miles per gallon.
DiamondPeak Holdings has risen briskly to $12.25 from its $10 IPO price earlier this year. That gives DPHC stock a $429 million market value now. However, a company presentation says that the SPAC holders will own just 21% of the company’s shares. Therefore, that implies that the post-merger market cap is now $2.04 billion at the current price of $12.25.
Importantly, DPHC says there will be no additional capital requirements. This implies its valuation is just 2 times or 3 times sales. Tesla (NASDAQ:TSLA), for example, trades at 10.8 times its historical sales.
Therefore, I believe that DPHC stock will rise at least 50% to 100% over the next year or so.
Churchill Capital III (CCXX)
Source: Shutterstock
On July 12, Churchill Capital III agreed to merge with MultiPlan, a large software provider for health insurance companies. The deal value is at an enterprise value of $11 billion. Right now MultiPlan is controlled by a private equity fund, Hellman & Friedman.
Since the announcement, CCXX continues to rise. Barron’s says this will be the largest U.S. SPAC deal ever when the reverse merger closes. MultiPlan will get $3.7 billion in new cash, from both debt and equity sources.
MultiPlan’s investor presentation shows that it expects to make $860 million in adjusted EBITDA by 2021. The problem is this company is hard to properly value. None of its competitors are public.
However, as a software and data company, it could potentially receive a high valuation of 18 times to 20 times EV-EBITDA. For example, Microsoft (NASDAQ:MSFT) trades for 23 times its historical EV-EBITDA. On a forward basis, this is about 18 times to 20 times.
Therefore, CCXX stock trades at a pro-forma ratio of 13.6 times now. But if the post-merger stock moved up to an 18 times ratio, the stock would rise by 32% from today’s price.
As a note, it appears that the company has not chosen a post-merger ticker for CCXX.
Spartan Energy Acquisition (SPAQ)
Source: Eric Broder Van Dyke / Shutterstock.com
On July 13 Spartan Energy Acquisition agreed to merge with Fisker. Fisker will make an electric SUV in 2022. According to Barron’s, Fisker expects to make 225,000 electric SUVs a year by 2025.
The reverse merger transaction is at a $2.9 billion enterprise valuation, assuming a $10 price for SPAQ stock. However, the stock has now risen to $12.36, so the new EV is almost 24% higher at $3.6 billion.
By the way, this $2.9 billion valuation number is on the press release. But a related slide presentation says the deal is at pro-forma value of $1.9 billion. So it is not clear which one applies. If the $1.9 billion EV number applies, the present valuation is almost 24% higher at $2.35 billion.
The deal will provide $1 billion to Fisker. The slide presentation implies it is very cheap. For example, the $1.9 EV valuation implies just 0.6 times 2023 estimated sales of $3.3 billion. It also implies just 4.3 times adjusted EBITDA of $441 million in 2023.
Therefore, since SPAQ stock has risen, the new EV-sales ratio is 0.76 times. That assumes a $1.9 billion valuation at the transaction. But if we assume a $2.9 valuation, after the recent stock price increase the ratio is 1.2 times. The same applies to the EV-EBITDA ratios. It is now either 5.6 times or 8.37 times.
The stock could easily double or triple by 2023, possibly much more than that. Again, Tesla stock trades for over 10.8 times historical sales.
As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide, which you can review here.
The post 5 Pre-Merger SPACs Worthy of Your Attention appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canadian pot stocks like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) trade at 3 times to 4 times 2021 expected revenue. The agreed-upon transaction, which should close sometime in Q4, will include a $200 million capital raise called a private investment in public equity (PIPE). This puts Cleaver Leaves’ pro-forma market cap at $334.5 million, using today’s price of $10.17 for SAMA stock. | Canadian pot stocks like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) trade at 3 times to 4 times 2021 expected revenue. 10 Small-Cap Stocks Ready to Become Large Caps Here are five pre-merger SPACs to watch: FinTech Acquisition Corp III (NASDAQ:FTAC) Schultze Special Purpose Acquisition Corp (NASDAQ:SAMA) DiamondPeak Holdings (NASDAQ:DPHC) Churchill Capital III (NYSE:CCXX) Spartan Energy Acquisition Corp (NYSE:SPAQ) SPACs: FinTech Acquisition Corp III (FTAC) Source: Wright Studio / Shutterstock.com On Aug. 3, FTAC agreed to merge with Paya, an Atlanta-based payments company with $30 billion of transactions. Schultze Special Purpose Acquisition (SAMA) Source: Shutterstock Schultze Special Purpose Acquisition Corp agreed on July 25 to merge with Clever Leaves, a Canadian cannabis company. | Canadian pot stocks like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) trade at 3 times to 4 times 2021 expected revenue. InvestorPlace - Stock Market News, Stock Advice & Trading Tips SPACs — special purpose acquisition companies — are very hot in the market these days. 10 Small-Cap Stocks Ready to Become Large Caps Here are five pre-merger SPACs to watch: FinTech Acquisition Corp III (NASDAQ:FTAC) Schultze Special Purpose Acquisition Corp (NASDAQ:SAMA) DiamondPeak Holdings (NASDAQ:DPHC) Churchill Capital III (NYSE:CCXX) Spartan Energy Acquisition Corp (NYSE:SPAQ) SPACs: FinTech Acquisition Corp III (FTAC) Source: Wright Studio / Shutterstock.com On Aug. 3, FTAC agreed to merge with Paya, an Atlanta-based payments company with $30 billion of transactions. | Canadian pot stocks like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) trade at 3 times to 4 times 2021 expected revenue. The reverse merger with SAMA stock will allow Clever Leaves to raise a net $111 million in cash and just $37 million in debt at an enterprise value of $255 million. For example, $334.5 million divided by $140 million in revenue implies the ratio is just 2.4 times. |
37330.0 | 2020-08-09 00:00:00 UTC | 3 Most Popular Marijuana Stocks on Robinhood: Are They Buys? | ACB | https://www.nasdaq.com/articles/3-most-popular-marijuana-stocks-on-robinhood%3A-are-they-buys-2020-08-09 | nan | nan | You might not be surprised one bit that many Robinhood investors like pot stocks. After all, the trading platform especially appeals to millennials. And millennials support marijuana legalization in higher numbers than any other generation.
But which pot stocks do Robinhood investors like the most? Here are the three most popular marijuana stocks on the no-commission trading platform -- and whether or not they're smart picks to buy right now.
Image source: Getty Images.
1. Aurora Cannabis
Aurora Cannabis (NYSE: ACB) ranked as Robinhood investors' favorite stock of all in December 2019. It's now 10 spots lower but still leads all other cannabis stocks on the list of the 100 most popular stocks on the platform.
Keep in mind that Aurora shares have plunged close to 60% so far this year. So why do Robinhood investors still like the stock so much? I think one factor is name recognition. The company has been in the news quite a bit over the last couple of years.
But there are also more substantive reasons for Aurora's popularity. The cannabis producer is a leader in the Canadian adult-use recreational marijuana and medical cannabis markets as well as in Germany's medical cannabis market. Aurora's production costs are low relative to most of the industry while its production capacity is high. After the stock's huge drop, the company's market cap is also well below most of its top rivals.
2. Canopy Growth
Canopy Growth (NYSE: CGC) comes in second behind Aurora in popularity among Robinhood investors when it comes to marijuana stocks. That reflects some positive momentum for Canopy: In December, it was in third place.
Perhaps one reason why Canopy is viewed more favorably is its CEO, David Klein. The former Constellation Brands CFO took the helm at Canopy in January. Although it's been a bumpy ride, Klein has taken firm steps to reduce the company's spending and get Canopy on a path to profitability.
It could have also impressed Robinhood investors that Constellation upped its stake in Canopy Growth in May. This move reaffirmed the adult-beverage giant's commitment to the long-term prospects for the cannabis industry and to Canopy's role as a leader.
3. Cronos Group
Cronos Group (NASDAQ: CRON) slipped a spot from late last year to take the No. 3 position among the most popular pot stocks on Robinhood. It might not be a coincidence that Cronos also is lagging slightly behind Canopy in year-to-date stock performance.
The company hasn't been in the spotlight all that much in recent months. So how is Cronos hanging onto its status near the top with Robinhood investors? One possibility is that Cronos has a solid U.S. presence thanks to its acquisition of Redwood last year. The deal brought the Lord Jones line of CBD products into Cronos' lineup.
Cronos also could stand out because of its partnership with Ginkgo Bioworks to develop cannabinoids using fermentation processes. In addition, Robinhood investors might have liked the company's moves to enter Israel's medical cannabis market.
Are they buys?
My Motley Fool colleague Sean Williams listed Aurora and Cronos in his list of pot stocks to avoid like the plague in August. I think avoiding the plague would take a much higher priority over staying away from the two Canadian marijuana stocks, but Sean's general sentiment is on point.
The problem for all three of the most popular pot stocks on Robinhood is that they continue to lose money. This is a more serious issue for Aurora, though, because it doesn't have deep-pocketed partners like Canopy has with Constellation and Cronos has with Altria Group.
I'm concerned about Aurora's massive debt load. I'm not convinced that the company will be able to achieve profitability as quickly as it's said it would. To me, Aurora has too many hurdles to jump to make it a compelling pick.
As for Cronos, my take on the stock isn't nearly as pessimistic as Sean's is. However, I'd prefer to see the company make a lot more progress toward profitability.
That leaves Canopy Growth. I think that David Klein has taken smart steps so far and will continue to steer Canopy in the right direction. My hunch is that we'll see changes to U.S. marijuana laws within the next year or two that will clear the way for Canopy to finalize its acquisition of Acreage Holdings and jump into the U.S. marijuana market.
To be sure, Canopy isn't my favorite cannabis stock. However, I still think it's a pretty good pick for investors with the patience to wait a while.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
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Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) ranked as Robinhood investors' favorite stock of all in December 2019. This move reaffirmed the adult-beverage giant's commitment to the long-term prospects for the cannabis industry and to Canopy's role as a leader. I think avoiding the plague would take a much higher priority over staying away from the two Canadian marijuana stocks, but Sean's general sentiment is on point. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) ranked as Robinhood investors' favorite stock of all in December 2019. Canopy Growth Canopy Growth (NYSE: CGC) comes in second behind Aurora in popularity among Robinhood investors when it comes to marijuana stocks. My Motley Fool colleague Sean Williams listed Aurora and Cronos in his list of pot stocks to avoid like the plague in August. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) ranked as Robinhood investors' favorite stock of all in December 2019. Canopy Growth Canopy Growth (NYSE: CGC) comes in second behind Aurora in popularity among Robinhood investors when it comes to marijuana stocks. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) ranked as Robinhood investors' favorite stock of all in December 2019. Here are the three most popular marijuana stocks on the no-commission trading platform -- and whether or not they're smart picks to buy right now. Canopy Growth Canopy Growth (NYSE: CGC) comes in second behind Aurora in popularity among Robinhood investors when it comes to marijuana stocks. |
37331.0 | 2020-08-07 00:00:00 UTC | 3 Reasons Investors Weren't Impressed With Aphria Stock's Q4 Results | ACB | https://www.nasdaq.com/articles/3-reasons-investors-werent-impressed-with-aphria-stocks-q4-results-2020-08-07 | nan | nan | On July 29, Canadian cannabis producer Aphria (NASDAQ: APHA) released its fourth-quarter results. Unfortunately, they didn't impress investors. Although the company was happy with its performance, the same can't be said for Wall Street, as the stock's been falling since the release of the results. On earnings day alone, the stock fell by a mammoth 19%.
The quarterly performance wasn't abysmal -- Aphria continued to show progress and increase its sales. But there were some troubling numbers that likely didn't sit well with shareholders. Here are three likely reasons the results weren't what investors were hoping for.
1. Aphria's sales growth was underwhelming
In Q4, Aphria's total net revenue came in at 152.2 million Canadian dollars. That was an 18% improvement from the prior-year period, during which the cannabis producer brought in CA$128.6 million. However, it was only a 5% improvement from the third quarter, in which net revenue totaled CA$144.4 million.
Image source: Getty Images.
It's a bit disappointing, especially given that during the pandemic, there's been a spike in marijuana sales in Canada. Monthly adult-use sales were hovering at about CA$150 million before the pandemic hit, during Aphria's fiscal third quarter. In the months that followed, monthly sales have been about CA$180 million, which is about a 20% improvement.
The company's cannabis sales of CA$65.5 million in Q4 were only slightly above the CA$64.4 million it recorded in Q3. This suggests that the company is losing market share, because its revenue is not rising in tandem with a surge in cannabis sales in the country.
2. It incurred impairment losses, like many of its peers
One thing that's likely irked investors in recent earnings results is that cannabis companies tend to incur impairment charges, weighing down their results. In May, Aphria's rival Canopy Growth released its fourth-quarter results, which included impairment and restructuring expenses of CA$843 million.
In February, Aurora Cannabis announced that it had incurred writedowns totaling CA$1 billion. HEXO incurred a more modest CA$250 million impairment in its second-quarter results, which the company released in March.
Aphria recorded an even smaller impairment charge of CA$64 million in Q4. It was the company's only blemish during the fiscal year, but it's a 10% increase from the CA$58 million impairment charges that Aphria incurred in the previous fiscal year.
Although the amount is relatively low compared to some of its rivals, these charges still serve as a reminder to investors that as well as the company's performed, Aphria faces many of the same industry challenges as its peers. One of the reasons investors gravitate toward Aphria is that it's generally seen as a safer (and better) buy than other cannabis companies. But an impairment charge of its own has put the stock back into a more negative light.
3. It recorded a steep loss compared with last year
Perhaps most disappointing was that Aphria incurred a loss of CA$84.6 million for the full fiscal year. Even if you factor out the impairment loss, the company would've still reported a net loss of about CA$20.7 million. Either way, that's higher than the CA$16.5 million loss Aphria incurred in the previous fiscal year (which also included impairment charges).
Although the company touted Q4 as the fifth straight quarter in which it recorded positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), the negative stock performance could indicate that investors are looking for more than that. The adjusted EBITDA results were 49% higher than the previous quarter's -- the kind of growth that would normally garner a much more positive response from investors.
Should you buy Aphria stock?
Aphria's stock was in positive territory this year prior to the recent sell-off:
APHA data by YCharts
The good news is that it's still doing better than the benchmark Horizons Marijuana Life Sciences ETF (OTC: HMLSF).
With Aphria's share price down as a result of its most recent quarterly results, now may be a great time for investors to buy the stock on the dip. Investors need to remember that this was just one quarter and the cannabis company still grew and posted positive (adjusted) earnings, indicating that it remains on the right track.
Although the quarter was a disappointment in some respects, that shouldn't affect investors' outlook on the company over the long term. Aphria's still a better buy than its peers, and these results don't change that.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Although the amount is relatively low compared to some of its rivals, these charges still serve as a reminder to investors that as well as the company's performed, Aphria faces many of the same industry challenges as its peers. Although the company touted Q4 as the fifth straight quarter in which it recorded positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), the negative stock performance could indicate that investors are looking for more than that. Aphria's stock was in positive territory this year prior to the recent sell-off: APHA data by YCharts The good news is that it's still doing better than the benchmark Horizons Marijuana Life Sciences ETF (OTC: HMLSF). | On July 29, Canadian cannabis producer Aphria (NASDAQ: APHA) released its fourth-quarter results. It was the company's only blemish during the fiscal year, but it's a 10% increase from the CA$58 million impairment charges that Aphria incurred in the previous fiscal year. Either way, that's higher than the CA$16.5 million loss Aphria incurred in the previous fiscal year (which also included impairment charges). | The company's cannabis sales of CA$65.5 million in Q4 were only slightly above the CA$64.4 million it recorded in Q3. It incurred impairment losses, like many of its peers One thing that's likely irked investors in recent earnings results is that cannabis companies tend to incur impairment charges, weighing down their results. It was the company's only blemish during the fiscal year, but it's a 10% increase from the CA$58 million impairment charges that Aphria incurred in the previous fiscal year. | The company's cannabis sales of CA$65.5 million in Q4 were only slightly above the CA$64.4 million it recorded in Q3. It incurred impairment losses, like many of its peers One thing that's likely irked investors in recent earnings results is that cannabis companies tend to incur impairment charges, weighing down their results. Should you buy Aphria stock? |
37332.0 | 2020-08-06 00:00:00 UTC | Investing in Aurora Cannabis? 6 Numbers You Need to Know | ACB | https://www.nasdaq.com/articles/investing-in-aurora-cannabis-6-numbers-you-need-to-know-2020-08-06 | nan | nan | For years, there wasn't a hotter investment on Wall Street than cannabis stocks. Through the end of the first quarter of 2019, investors could do no wrong. The expectation of ongoing legalizations in the U.S., capacity expansion, new product launches, and acquisitions, proved more than enough to send pot stock valuations into the stratosphere.
The past 16 months haven't been as nice. Though last month was relatively kind to a dozen well-known weed stocks, a handful of popular marijuana stocks have been absolutely pummeled. Perhaps none more so than Aurora Cannabis (NYSE: ACB).
Aurora, the most-popular cannabis stock among millennial investors, has declined from a reverse-split-adjusted price of almost $120 a share in mid-March 2019 to less than $11 a share, as of Tuesday, Aug. 4, 2020.
If you're a current shareholder of Aurora Cannabis or have been contemplating buying in, here are the six numbers you'll absolutely want to be focusing on.
Image source: Getty Images.
1. Cash cost to produce per gram sold
Though most folks are solely focused on headline figures, like net sales and net income/loss, the first number you'll want to know as a shareholder or prospective investor in Aurora is the company's cash cost to produce per gram sold.
Recently, Aurora Cannabis announced in a cost-saving move that it would be closing five of its smaller production facilities. This comes after the company sold off the 1-million-square-foot Exeter greenhouse that was never retrofit for cannabis production, and halted construction on two of its larger projects (Aurora Nordic 2 in Denmark and Aurora Sun in Alberta).
Aside from simply trimming costs to backpedal toward profitability, shuttering these smaller facilities is a ploy to allow Aurora Cannabis to take advantage of economies of scale. This is to say that larger cultivation farms should offer lower production costs -- and lower per-gram production costs would be expected to boost margins.
Aurora's margins all start with its cash costs to produce cannabis per gram sold.
Image source: Getty Images.
2. Inventory
I'd caution investors not to get too wrapped up in how many kilograms of weed Aurora is producing each quarter. A much more relevant figure that'll put the company's output into the proper context is its inventory.
All marijuana stocks should have a healthy amount of inventory on hand to take advantage of increased demand, improved pricing, and exports to overseas markets. But having too much inventory can be problematic. Excess inventory is sometimes discounted heavily in order to be moved, which can weigh on margins, or on some occasions is destroyed entirely.
In Aurora's case, the company has faced supply bottlenecks in select Canadian provinces (ahem, Ontario) where an insufficient number of retail locations are open to sell adult-use marijuana products. As a result, its inventory levels have continued to climb. Thus, a stable or falling inventory figure would signal to investors that Aurora is finding new channels to sell its cannabis products.
Image source: Getty Images.
3. International sales
A third figure of great importance is the company's international sales.
No Canadian marijuana stock has a broader global reach than Aurora Cannabis -- albeit this international presence hasn't provided much in the way of recurring sales, as of yet. Including production, export potential, and research opportunities, Aurora has a presence in two dozen countries outside of Canada.
Most recently, Aurora acquired cannabidiol (CBD)-focused company Reliva in the United States in an all-stock deal. Though CBD has been a bit of a disappointment in the U.S., the move allows Aurora to get its feet on U.S. soil should the federal government ever decide to legalize marijuana.
The point is, international sales should play a very big long-term role for Aurora Cannabis, and this is the specific revenue figure that investors should be paying their closest attention to.
Image source: Getty Images.
4. Adjusted EBITDA
Current and prospective Aurora Cannabis investors shouldn't turn a blind eye to the company's bottom line, but there's a far more important metric for at least the next two quarters: adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
As some of you might recall, Aurora announced a massive corporate overhaul in February. The company's longtime CEO Terry Booth told the world he would be stepping down and retiring, while the company outlined plans to reduce its selling, general and administrative expenses from around $100 million Canadian a quarter to a range of CA$40 million to CA$45 million per quarter. This included letting more than 10% of its workforce go, although additional layoffs have been announced since February.
Most importantly, the company's corporate strategy shift involved reworking its debt covenant. The new covenant requires Aurora Cannabis to generate positive adjusted EBITDA by no later than the first fiscal quarter of 2021 (ended Sept. 30). If the company were to default, its lenders may swoop in to collect on what's owed -- and let's just say that Aurora isn't exactly known for being cash-rich.
No number is more important right now for Aurora than its adjusted EBITDA.
Image source: Getty Images.
5. Cash on hand
Logically, the next number you're going to want to know is Aurora's cash on hand (this includes cash equivalents and any marketable securities, as well).
Even though Aurora ended March with CA$230.2 million in cash, which certainly sounds like a hearty buffer, it masks the fact that the company burned through more than CA$427 million in cash between Oct. 1, 2019 and March 31, 2020. This unsustainable cash burn is a big reason behind the company's aforementioned overhaul that was announced in February.
The issue for Aurora is that it has few nondilutive avenues to raise capital. It already has an outstanding loan, and its operating performance hasn't exactly stoked confidence in other banks to lend the company money. Instead, Aurora Cannabis has had little choice but to continually issue its own stock to raise capital.
In April, Aurora's board approved a $350 million (that's U.S.) at-the-market stock offering. Essentially, this allows the company to sell shares of its common stock to raise capital as it sees fit over the next, roughly, two years. This will allow Aurora to raise up to $350 million, but it'll also see existing shareholders diluted in the process.
Pay very close attention to Aurora's cash on hand and burn rate, as it'll ultimately dictate how much share-based dilution shareholders will contend with.
Image source: Getty Images.
6. Goodwill
Lastly, current and prospective investors will want to keep a close eye on Aurora's balance sheet. More specifically, the company's goodwill, which stood at CA$2.42 billion in the most recent quarter.
Goodwill is the premium an acquiring company pays above and beyond tangible and intangible assets. The expectation for a purchasing company is that it'll be able to recoup this premium over time, thereby whittling away any goodwill that's been recognized on its balance sheet.
But there's another way to look at goodwill: the gross overpayment for an asset. In Aurora's case, it grossly overpaid for licensed producer MedReleaf in July 2018. The all-share deal came with a price tag of CA$2.64 billion. But Aurora has since sold off the Exeter facility and shut down MedReleaf's smaller grow farm. Essentially, it paid CA$2.64 billion for a 28,000 kilos of annual output and a handful of proprietary brands.
It's my belief that Aurora Cannabis has some big writedowns in its future, and they likely begin with the company's CA$2.42 billion in goodwill.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). In Aurora's case, the company has faced supply bottlenecks in select Canadian provinces (ahem, Ontario) where an insufficient number of retail locations are open to sell adult-use marijuana products. No Canadian marijuana stock has a broader global reach than Aurora Cannabis -- albeit this international presence hasn't provided much in the way of recurring sales, as of yet. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). Cash cost to produce per gram sold Though most folks are solely focused on headline figures, like net sales and net income/loss, the first number you'll want to know as a shareholder or prospective investor in Aurora is the company's cash cost to produce per gram sold. This is to say that larger cultivation farms should offer lower production costs -- and lower per-gram production costs would be expected to boost margins. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). Cash cost to produce per gram sold Though most folks are solely focused on headline figures, like net sales and net income/loss, the first number you'll want to know as a shareholder or prospective investor in Aurora is the company's cash cost to produce per gram sold. This comes after the company sold off the 1-million-square-foot Exeter greenhouse that was never retrofit for cannabis production, and halted construction on two of its larger projects (Aurora Nordic 2 in Denmark and Aurora Sun in Alberta). | Perhaps none more so than Aurora Cannabis (NYSE: ACB). Aurora's margins all start with its cash costs to produce cannabis per gram sold. Even though Aurora ended March with CA$230.2 million in cash, which certainly sounds like a hearty buffer, it masks the fact that the company burned through more than CA$427 million in cash between Oct. 1, 2019 and March 31, 2020. |
37333.0 | 2020-08-04 00:00:00 UTC | 9 Top Robinhood Stocks You May Want to Avoid Here | ACB | https://www.nasdaq.com/articles/9-top-robinhood-stocks-you-may-want-to-avoid-here-2020-08-04 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
At the height of the pandemic, amid stay-at-home orders, retail investors flooded onto the zero-commission Robinhood stock trading platform. Since then, so-called Robinhood stocks have become something of a pejorative among experienced investors.
After all, the conventional wisdom is that retail investors tend to enter a market at the top. The dot-com bubble of the late 1990s, which burst in early 2000, is best perhaps the best example.
Of course, that’s not what happened in 2020. In this case, the retail investors were right. Robinhood’s trading activity picked up noticeably in March, when stocks plunged as institutions and hedge funds fled the market. Individual investors, by and large, bought at the bottom. Thousands made huge profits in names like Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN).
As David Kass, a clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business, explained in an email to InvestorPlace, “Robinhood has introduced trading in stocks, ETFs, and options to a new generation of young investors in their 20’s and 30’s by providing these services without charging any commissions or fees. As a result of offering investors the opportunity to invest in fractional shares with as little as $1, the world of investing in equities has been democratized such that virtually everyone can participate.”
As markets have normalized, however, some widely owned Robinhood stocks, as compiled by the excellent website Robintrack.net, look questionable.
Multiple biotechs have soared on minimal news related to a novel coronavirus vaccine or treatment, only to collapse almost as quickly. Stocks near or even in bankruptcy, like Chesapeake Energy (NYSE:CHK) and J.C. Penney (OTCMKTS:JCPNQ) saw huge, unsustainable rallies.
8 5G Stocks to Get Rich Off Our Information Addiction
So while Robinhood investors timed the market well, they also have owned, and still own, a few duds. Here are nine of those Robinhood stocks. All are in the top 100 stocks on the platform, per Robintrack data. And all probably shouldn’t be:
Hertz (NYSE:HTZ)
Aurora Cannabis (NYSE:ACB)
GoPro (NASDAQ:GPRO)
Genius Brands (NASDAQ:GNUS)
United States Oil Fund (NYSEARCA:USO)
iBio (NYSEMKT:IBIO)
AMC Entertainment (NYSE:AMC)
American Airlines (NASDAQ:AAL)
General Electric (NYSE:GE)
Robinhood Stocks to Avoid: Hertz (HTZ)
Source: aureliefrance / Shutterstock.com
Hertz helped give Robinhood stocks their reputation. As InvestorPlace Markets Analyst Thomas Yeung noted on this site, 11,000 Robinhood investors bought shares the day after the company declared bankruptcy in May. At one point, Hertz was in Chapter 11 and still had a market capitalization over $700 million.
The gains have faded since, but HTZ stock remains one of the biggest Robinhood stocks. According to Robintrack data, HTZ still is the 57th-most-owned stock on the Robinhood platform. It’s ahead of popular stocks like DraftKings (NASDAQ:DKNG) and General Motors (NYSE:GM), among many others.
And the stock still has a market capitalization of almost $200 million. HTZ in fact has rallied 166% following an 80% plunge when bankruptcy was declared.
After those gains, the current valuation simply doesn’t make much sense. The only way the common stock will have any value at all is if the value of Hertz’s assets clears its debt. That seems highly unlikely, barring a massive and sustained increase in used car values.
With the bankruptcy itself likely to cost hundreds of millions of dollars, and ongoing losses amid a collapse in demand, the math simply doesn’t work. It’s long since past time to move on from Hertz stock.
Aurora Cannabis (ACB)
Source: Shutterstock
Robinhood investors, perhaps unsurprisingly, are fond of cannabis stocks. Many of the most widely owned names come from the sector.
That optimism admittedly makes some sense. Cannabis stocks aren’t necessarily cheap, given many aren’t yet profitable. But they’re certainly cheaper than they have been.
Meanwhile, the industry retains some long-term potential. It’s abundantly clear at this point that Canadian operators, in particular, are dealing with oversupply. Even Canopy Growth (NYSE:CGC) CEO David Klein has admitted that there are “no logical buyers” for production facilities. But cannabis producers are responding, which should at some point lead to pricing stabilization and, hopefully, positive earnings and free cash flow.
So the issue isn’t necessarily the optimism toward the sector. It’s the top two choices: Aurora and Hexo (NYSE:HEXO). Both companies have significant balance sheet problems. In even a best-case scenario, both will be playing defense for years to come.
Meanwhile, the likes of Canopy and Cronos (NASDAQ:CRON) sit with substantial cash — and thus plenty of flexibility to respond to market challenges going forward.
It seems like Robinhood investors, to at least some degree, have focused on the low share prices of ACB (before its reverse split) and HEXO. That’s a mistake. Those shares prices are low for a reason. Even cannabis bulls should be looking elsewhere.
Robinhood Stocks to Avoid: GoPro (GPRO)
Source: Larry George II / Shutterstock.com
There are worse stocks on this list than GoPro, at least in my opinion.
GoPro is the leader in the action camera category. Valuation, at least based on revenue — and expected profits next year — is reasonable at worst.
That said, it is hard to see much of a reason to get excited about GPRO stock. The action camera category is stagnant. Profitability has been inconsistent. It’s possible GoPro at some point becomes an acquisition target, but bulls have been making that case for years now.
Robinhood investors see GPRO stock very differently, however. The stock is the 10th-most owned on the platform, with nearly half a million shareholders. It’s ahead of AMZN, Boeing (NYSE:BA) and many other companies with market values 100x higher.
That kind of optimism seems like too much. GPRO has been dead money for years now, and that may continue for quite a while.
Genius Brands (GNUS)
Source: patat / Shutterstock.com
Starting on May 5, GNUS stock rose almost 25-fold in less than a month. Robinhood buying appears to have been a key catalyst. Ownership went from roughly 5,000 in early May to nearly 200,000 by mid-June.
The problem was that there wasn’t a lot of reason for the rally — or the buying. Bulls — aided by a fair amount of promotion by the company — saw Genius Brands as potentially a Netflix (NASDAQ:NFLX) alternative for kids.
But as InvestorPlace Markets Analyst Luke Lango argued this month, that case seems far too optimistic. And so it’s no surprise that GNUS has given back a good chunk of its gains.
The problem is that shares still are up over 400% from their early May levels. The company’s Kartoon Channel hardly seems like enough to support that kind of move, even with Genius Brands taking advantage of the rally to improve its balance sheet. It seems likely that at some point, even the remaining die-hard fans will exit, leaving GNUS back where it started.
Robinhood Stocks to Avoid: United States Oil Fund (USO)
Source: Shutterstock
The United States Oil Fund truly highlights the diverging perspectives surrounding Robinhood stocks. On one hand, the huge increase in ownership of USO seems questionable, to say the least.
USO is supposed to track crude spot prices. But the problem is that the fund has to use futures to do so. Over time, rolling over those futures has steadily eroded the value of the fund. As InvestorPlace’s Todd Shriber noted in late May, the fund through March 31 had posted an annualized loss of 18%.
And so the roughly 150,000 investors who own USO don’t seem to understand the entire story. In fact, many flooded into the fund in April, when USO had to execute a 1-for-8 reverse split after oil futures briefly went negative. Instead of learning from the fund’s troubles — and a noted change in its structure — Robinhood investors went in full-bore.
But those investors, whether they understand the fund or not, have been right. USO is up over 60% since the reverse split. Once again, the investors being scorned for their lack of knowledge are handily outperforming those who supposedly know better.
iBio (IBIO)
Source: Shutterstock
As far as coronavirus plays go, the same dynamics seems to hold. Robinhood investors were early to some of 2020’s best stocks, including Moderna (NASDAQ:MRNA) and Inovio (NASDAQ:INO).
But, as I wrote about INO stock this month, on the whole, individual investors seem to be pricing in too much success into too many names. And we’ve seen some questionable biotech stocks post huge rallies on little news beyond a press release or two.
From here, iBio looks like one of those questionable biotechs. iBio took advantage of the Ebola pandemic to raise capital — and hopes — surrounding its pipeline. Nothing came of that optimism, and by last year the company had a market capitalization under $10 million.
It’s not guaranteed that history repeats itself. But with so many firms — among them the world’s greatest biotech and pharma companies — trying to develop a vaccine, it seems far too risky that iBio will be the winner this time.
Robinhood Stocks to Avoid: AMC Entertainment (AMC)
Source: Helen89 / Shutterstock.com
Movie theater operator AMC Entertainment seems like a perfect play on the return to normalcy. Shares are down 43% so far this year, but once a coronavirus vaccine or treatment arrives, demand should rebound in a hurry.
Robinhood investors certainly are buying the case. AMC is the 54th-most owned stock on the entire platform, despite a market capitalization under $500 million.
There’s one big problem with the case, however: AMC stock isn’t cheap. Yes, it’s down 43% so far this year. But considering losses this year, and debt raised to fund those losses, AMC including debt actually is nearly as expensive as it was at the start of the year.
Meanwhile, in part because of that debt, the stock looked like a value trap even before the coronavirus began to spread. With bankruptcy a very real risk, AMC seems like one of the Robinhood stocks that the platform has gotten wrong.
American Airlines (AAL)
Source: GagliardiPhotography / Shutterstock.com
AMC isn’t the only play on normalcy among Robinhood stocks. American Airlines is a major holding, with over 650,000 users. That’s the third-highest figure on the entire platform.
But as I detailed earlier this week, AAL stock isn’t the right play, even for airline bulls. Like AMC, American has a troubling amount of debt. In fact, it almost certainly has the worst balance sheet of the four major U.S. airlines.
Management is a concern as well, even in the context of an industry that badly erred in preparing for the next crisis.
There is a better option in terms of playing an airline rebound, which admittedly is one of the more-owned Robinhood stocks: Southwest Airlines (NYSE:LUV). A better balance sheet and better management seems to make LUV a better choice, even if Robinhood investors disagree.
Robinhood Stocks to Avoid: General Electric (GE)
As far as cheap stocks go, General Electric probably isn’t a terrible choice. New CEO Larry Culp is trying to right the ship. Asset sales have helped the balance sheet. GE at $30-plus a few years back was a clearly dangerous name, even at the time. Under $7, it’s not the worst gamble in the market.
Still, the risks here remain significant. And there are reasons why GE stock hasn’t been able to match the optimism that greeted Culp’s hire in October 2018. Boeing’s problems are a factor. The pandemic hasn’t helped, either.
The broader issue, however, remains the same: GE is not what it was. GE Healthcare is an excellent business, but Power is a mess, Aviation is struggling, and there’s not much left after a series of divestitures.
From a distance, GE stock looks worth the gamble. Looking closer, the case gets much more cloudy. Yet GE stock, somewhat incredibly, is the second-most owned of all Robinhood stocks. Only Ford (NYSE:F), another once-great company struggling to execute a turnaround, is more popular. In both cases, however, Robinhood investors seem to be looking backward, instead of forward.
After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets. He has no positions in any securities mentioned.
The post 9 Top Robinhood Stocks You May Want to Avoid Here appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | And all probably shouldn’t be: Hertz (NYSE:HTZ) Aurora Cannabis (NYSE:ACB) GoPro (NASDAQ:GPRO) Genius Brands (NASDAQ:GNUS) United States Oil Fund (NYSEARCA:USO) iBio (NYSEMKT:IBIO) AMC Entertainment (NYSE:AMC) American Airlines (NASDAQ:AAL) General Electric (NYSE:GE) Robinhood Stocks to Avoid: Hertz (HTZ) Source: aureliefrance / Shutterstock.com Hertz helped give Robinhood stocks their reputation. Aurora Cannabis (ACB) Source: Shutterstock Robinhood investors, perhaps unsurprisingly, are fond of cannabis stocks. It seems like Robinhood investors, to at least some degree, have focused on the low share prices of ACB (before its reverse split) and HEXO. | And all probably shouldn’t be: Hertz (NYSE:HTZ) Aurora Cannabis (NYSE:ACB) GoPro (NASDAQ:GPRO) Genius Brands (NASDAQ:GNUS) United States Oil Fund (NYSEARCA:USO) iBio (NYSEMKT:IBIO) AMC Entertainment (NYSE:AMC) American Airlines (NASDAQ:AAL) General Electric (NYSE:GE) Robinhood Stocks to Avoid: Hertz (HTZ) Source: aureliefrance / Shutterstock.com Hertz helped give Robinhood stocks their reputation. Aurora Cannabis (ACB) Source: Shutterstock Robinhood investors, perhaps unsurprisingly, are fond of cannabis stocks. It seems like Robinhood investors, to at least some degree, have focused on the low share prices of ACB (before its reverse split) and HEXO. | And all probably shouldn’t be: Hertz (NYSE:HTZ) Aurora Cannabis (NYSE:ACB) GoPro (NASDAQ:GPRO) Genius Brands (NASDAQ:GNUS) United States Oil Fund (NYSEARCA:USO) iBio (NYSEMKT:IBIO) AMC Entertainment (NYSE:AMC) American Airlines (NASDAQ:AAL) General Electric (NYSE:GE) Robinhood Stocks to Avoid: Hertz (HTZ) Source: aureliefrance / Shutterstock.com Hertz helped give Robinhood stocks their reputation. Aurora Cannabis (ACB) Source: Shutterstock Robinhood investors, perhaps unsurprisingly, are fond of cannabis stocks. It seems like Robinhood investors, to at least some degree, have focused on the low share prices of ACB (before its reverse split) and HEXO. | And all probably shouldn’t be: Hertz (NYSE:HTZ) Aurora Cannabis (NYSE:ACB) GoPro (NASDAQ:GPRO) Genius Brands (NASDAQ:GNUS) United States Oil Fund (NYSEARCA:USO) iBio (NYSEMKT:IBIO) AMC Entertainment (NYSE:AMC) American Airlines (NASDAQ:AAL) General Electric (NYSE:GE) Robinhood Stocks to Avoid: Hertz (HTZ) Source: aureliefrance / Shutterstock.com Hertz helped give Robinhood stocks their reputation. Aurora Cannabis (ACB) Source: Shutterstock Robinhood investors, perhaps unsurprisingly, are fond of cannabis stocks. It seems like Robinhood investors, to at least some degree, have focused on the low share prices of ACB (before its reverse split) and HEXO. |
37334.0 | 2020-08-04 00:00:00 UTC | What Should Investors Think of Aphria's Unexpected Quarterly Loss? | ACB | https://www.nasdaq.com/articles/what-should-investors-think-of-aphrias-unexpected-quarterly-loss-2020-08-04 | nan | nan | There aren't many marijuana companies out there that have stayed profitable over the past year or so. While most of the big names in this industry have seen their shares plummet alongside continued losses, one of the few exceptions is Canadian cannabis grower Aphria (NASDAQ: APHA).
To many investors' surprise, however, the company reported an unexpected net loss in its recent fiscal fourth quarter. In response, the stock tumbled close to 20% following the announcement, a loss that has many investors wondering whether this pot stock is still worth a spot in their portfolio.
Let's look a little deeper and see what exactly is going on.
Image source: Getty Images.
What happened?
For the most part, Aphria has forged a reputation as being a profitable cannabis company. Thanks to its German subsidiary, CC Pharma, Aphria's managed to do quite well for itself over the past year or so. The last time Aphria failed to post a profit was during its fiscal second quarter, when the company reported a loss of $7.9 million Canadian.
In comparison, Aphria's recent Q4 results featured a staggering CA$98.8 million net loss, making it one of the worst quarters in recent history for the company. That said, most of these losses were due to one-time expenses; about CA$64 million of the total came from non-cash impairment charges on Aphria's international assets in response to COVID-19.
Understanding what's going on
Diving a bit deeper into these results, Aphria's situation doesn't seem all that bad. Its overall revenue figures have continued to grow despite this pandemic, with net revenue rising by 5% in comparison to the previous quarter. Additionally, Aphria is becoming even more efficient at producing cannabis, something it was already pretty good at. Its cash cost to produce dried cannabis declined to CA$0.88 per gram, down 5% from the previous quarter as well.
While this might not seem like much in comparison to a CA$99 million loss, it's a pretty solid sign that Aphria's fundamental business is managing to do OK for itself despite this pandemic. In comparison, the much larger Canopy Growth (NYSE: CGC) saw its net revenue decline by 13% between its third and fourth fiscal quarters. That's on top of a CA$1.3 billion net loss that the company reported in Q4.
At the same time, Aphria's in a pretty good cash position, so taking this one-time financial hit won't shake the business that much. The company has about CA$497.2 million in cash and cash equivalents after reporting this net loss, which is pretty good in comparison to most other companies in this industry.
Image source: Getty Images.
Should you buy Aphria while it's cheap?
Despite being profitable this year (for the most part), Aphria has always been a relatively cheap stock by most cannabis company standards. Its price-to-sales (P/S) ratio is currently sitting at 3.1. Canopy Growth is trading at a 21.3 P/S ratio despite having a pretty poor quarter overall. Even Aurora Cannabis, one of the most battered cannabis companies on the market with more than its fair share of financial problems, has a P/S ratio of 4.2.
It's pretty rare to find a company that's both financially healthy and priced more cheaply than its competition. That's already the hallmark of a good value investment -- but there are some other things worth mentioning here as well.
First of all, Aphria has received some crucial certifications in Germany that would allow the company to export Canadian cannabis for German distribution. These export sales are expected to further supplement its distribution revenue from CC Pharma, which already accounts for the majority of Aphria's overall income.
Management also said that it might consider buying up distressed assets during this crisis as well. That could be a good idea for Aphria, as there are likely plenty of cannabis assets being sold by companies that are now struggling amid coronavirus-induced business slowdowns.
As the old saying from Warren Buffett goes, "Be fearful when others are greedy and greedy when others are fearful." This unexpected loss on Aphria's part isn't that big of a deal in the long run, especially when all of its other financials are quite healthy. As such, investors shouldn't be overly concerned about Aphria right now. In fact, I'd say now's a pretty good buying opportunity for investors looking to find solid value stocks during this market climate.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | While most of the big names in this industry have seen their shares plummet alongside continued losses, one of the few exceptions is Canadian cannabis grower Aphria (NASDAQ: APHA). That said, most of these losses were due to one-time expenses; about CA$64 million of the total came from non-cash impairment charges on Aphria's international assets in response to COVID-19. At the same time, Aphria's in a pretty good cash position, so taking this one-time financial hit won't shake the business that much. | To many investors' surprise, however, the company reported an unexpected net loss in its recent fiscal fourth quarter. In comparison, Aphria's recent Q4 results featured a staggering CA$98.8 million net loss, making it one of the worst quarters in recent history for the company. The company has about CA$497.2 million in cash and cash equivalents after reporting this net loss, which is pretty good in comparison to most other companies in this industry. | In comparison, Aphria's recent Q4 results featured a staggering CA$98.8 million net loss, making it one of the worst quarters in recent history for the company. The company has about CA$497.2 million in cash and cash equivalents after reporting this net loss, which is pretty good in comparison to most other companies in this industry. Despite being profitable this year (for the most part), Aphria has always been a relatively cheap stock by most cannabis company standards. | The last time Aphria failed to post a profit was during its fiscal second quarter, when the company reported a loss of $7.9 million Canadian. While this might not seem like much in comparison to a CA$99 million loss, it's a pretty solid sign that Aphria's fundamental business is managing to do OK for itself despite this pandemic. The company has about CA$497.2 million in cash and cash equivalents after reporting this net loss, which is pretty good in comparison to most other companies in this industry. |
37335.0 | 2020-08-03 00:00:00 UTC | These 2 Stock Market Sectors Are Buys if Biden Beats Trump in November | ACB | https://www.nasdaq.com/articles/these-2-stock-market-sectors-are-buys-if-biden-beats-trump-in-november-2020-08-03 | nan | nan | I'm not a political person and do not have a partisan bone in my body. Still, the election this November could shape certain stock market sector performance over the long term. Experienced market participants with time horizons of several years (not months) understand that presidential elections often over promise the implications for equity markets. Regardless, a Biden win could serve as a tailwind for these two sectors:
Cannabis
While there's no guarantee that Joe Biden will legalize cannabis, his proposed cabinet is full of supporters. Today, America boasts bipartisan support for federal marijuana legalization. With regulation currently up to states, multi-state growers can legally only sell to roughly a third of the American population. This means that illicit markets with no regulations or quality control continue to thrive in many parts of the country. Furthermore, American growers cannot currently export to European nations, however, federal legalization would open up that option.
Image source: Getty Images.
The federal government currently collects zero federal tax on cannabis sales. With the pandemic obliterating government revenues, it is now even more timely for a president to support federal legalization and taxation of cannabis.
Cresco Labs and Green Thumb Industries are two large US multi-state operators that would surely benefit. The bigger boost, however, may be for the Canadian growers. Canada's population is just over one-tenth the size of the U.S. and has a fraction of the retail footprint. California alone has more legal cannabis consumers than Canada. Federal legalization in the U.S. would mean companies like Aurora Cannabis and Canopy Growth could export product to the states and enjoy a massive increase in their addressable customer bases. Based on the current supply gluts facing our friends up north, this would be welcome news.
Renewable energy supply chains
Next is renewable energy and all ancillary companies. Biden's infrastructure plan aims to pump $2 trillion into green energy investments over four years. The money will be used to build solar panels, charging stations, and more. Obviously, this would be bullish for large renewable energy stocks like First Solar (NASDAQ: FSLR). This energy company operates several large-scale solar power plants nationwide and manufactures solar panels using proprietary photovoltaic technology. The benefits, however, extend beyond pure-play green energy companies.
Large industrial companies will surely be needed for such a transformative initiative. That is good news for stocks such as Caterpillar, as $2 trillion in new infrastructure surely requires equipment. Caterpillar sells industrial machines likely needed to build a greener grid. Perhaps even more interesting: The company has a growing solar energy business of its own that could benefit.
Biden's plan also calls for extensive investments in rebuilding roads & bridges. It's feasible to think asphalt and concrete giants like Vulcan Materials could benefit.
Silver is also a clear beneficiary. Photovoltaic cells (the most common solar panel type) require large amounts of silver to construct. This is a positive for related tickers such as iShares Silver Trust. Yes, mining is environmentally taxing, but it is also a necessary evil if national solar farms are going to be a reality. The metal is a rare combination of an industrial material used in green energy and an inflation hedge. With all the stimulus money being pumped into the economy, and Joe Biden fully planning on sizable renewable energy spending, now may be a good time to make an investment.
Until November, there will be an overwhelming amount of political commentary to digest. Some will be useful for investors but most won't. For market participants more interested in stocks than following a campaign, this is an objective take on the cause and effect of a Biden win. Cannabis and renewables look poised to gain from a Biden victory that will lead to legislation.
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Bradley Freeman owns shares of Aurora Cannabis Inc., Canopy Growth., and Cresco Labs Inc. The Motley Fool owns shares of and recommends Cresco Labs Inc. and Green Thumb Industries. The Motley Fool recommends First Solar and SolarEdge Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | With the pandemic obliterating government revenues, it is now even more timely for a president to support federal legalization and taxation of cannabis. Federal legalization in the U.S. would mean companies like Aurora Cannabis and Canopy Growth could export product to the states and enjoy a massive increase in their addressable customer bases. With all the stimulus money being pumped into the economy, and Joe Biden fully planning on sizable renewable energy spending, now may be a good time to make an investment. | Cresco Labs and Green Thumb Industries are two large US multi-state operators that would surely benefit. Biden's infrastructure plan aims to pump $2 trillion into green energy investments over four years. The Motley Fool owns shares of and recommends Cresco Labs Inc. and Green Thumb Industries. | Regardless, a Biden win could serve as a tailwind for these two sectors: Cannabis While there's no guarantee that Joe Biden will legalize cannabis, his proposed cabinet is full of supporters. Obviously, this would be bullish for large renewable energy stocks like First Solar (NASDAQ: FSLR). See the 10 stocks Stock Advisor returns as of 2/1/20 Bradley Freeman owns shares of Aurora Cannabis Inc., Canopy Growth., and Cresco Labs Inc. | With regulation currently up to states, multi-state growers can legally only sell to roughly a third of the American population. Furthermore, American growers cannot currently export to European nations, however, federal legalization would open up that option. With all the stimulus money being pumped into the economy, and Joe Biden fully planning on sizable renewable energy spending, now may be a good time to make an investment. |
37336.0 | 2020-08-03 00:00:00 UTC | 3 Pot Stocks to Avoid Like the Plague in August | ACB | https://www.nasdaq.com/articles/3-pot-stocks-to-avoid-like-the-plague-in-august-2020-08-03 | nan | nan | For the past 16 months, marijuana stocks have been a nightmarish holding for investors. Many have fallen 50% or more as growing pains have picked up throughout North America. Regulatory-based supply issues in Canada and exorbitant tax rates on legal weed in select U.S. states have allowed illicit marijuana to thrive.
The good news is that there's definitely a path forward for the North American legal cannabis industry. As the industry matures, standouts will emerge.
On the other hand, it means that not every pot stock can be a winner. While it's still a bit too early to concretely call certain marijuana stocks long-term winners or losers, there are a handful of companies that should be surrounded with yellow caution tape, at least in the near term. The following three pot stocks are the perfect examples of cannabis companies that should be avoided like the plague in August.
Image source: Getty Images.
HEXO
Topping the list of marijuana stocks that investors would be wise to avoid this month is Quebec-based HEXO (NYSE: HEXO).
At one time, HEXO looked as if it had a winning formula. The company had a signed five-year agreement with its home province of Quebec to supply 200,000 kilos (in aggregate) of cannabis for the adult-use market, and was ramping up capacity and derivative production (i.e., non-flower products, such as edibles) to meet an expected surge in Canadian demand. But, as noted, supply bottlenecks wrecked this vision.
Today, HEXO is scrambling to reduce its operating costs and bring its output potential in-line with demand. This has involved shuttering and selling off the Niagara grow farm that was acquired via the Newstrike Brands acquisition in 2019, as well as idling some of its grow space at the flagship Gatineau facility. HEXO's also had little choice but to lay off some of its workers to reduce costs.
Beyond just backpedaling to right the ship, HEXO's cash balance is a bit of a concern. In June, HEXO announced a $34.5 million Canadian at-the-market stock offering, which comes after multiple rounds of stock issuances and convertible debt offerings. This is a roundabout way of saying that shoring up the company's balance sheet has involved drowning existing shareholders with new stock. This is unlikely to end anytime soon.
And let's not forget that HEXO is playing with fire by having a share price that's consistently been below $1 for almost the entirety of the past four months. Without a reverse split, HEXO appears destined to be delisted from the New York Stock Exchange. These are all good reasons to steer clear for now.
Image source: Getty Images.
Cronos Group
Another cannabis stock that investors ae going to want to steer clear of in August is Canadian licensed producer Cronos Group (NASDAQ: CRON), which happens to be reporting its second-quarter operating results later this week.
Like HEXO, Cronos appeared to have a solid growth strategy, especially following a $1.8 billion equity investment from tobacco giant Altria Group (NYSE: MO) that resolved all of its near-term cash concerns. With plenty of cash and Altria in its corner, the expectation was that Cronos Group would become a cannabis vape superstar and quickly reap the rewards of Canadian derivative sales. Though you can probably guess what I'm about to say, this didn't happen.
First off, Cronos Group has run into all sorts of issues with its derivatives/vape-focused approach. Health Canada delayed the launch of derivative products by two months, and in key provinces like Ontario, an inability to license retail locations led to supply bottlenecks. There were also safety concerns, with a handful of Canadian provinces banning cannabis vape products.
That brings me to the next point: Cronos isn't a major player on the production front. Though it has cash at its disposal, Cronos is leaning on Peace Naturals as its primary source of cannabis production. At its max, Peace Naturals is only capable of 40,000 kilos a year, and some of its cultivation space was repurposed by Cronos Group. Suffice it to say that Cronos isn't the big player it's perceived to be.
The company is also losing quite a bit of money on an operating basis. If investors parse out the derivative liability revaluations tied to the Altria equity investment, they'd see a company that hasn't come close to generating an operating profit. Perhaps more concerning is that Cronos' $1.8 billion in cash has been whittled down to $1.33 billion in cash, cash equivalents, and marketable securities in a year.
There's no real plan or catalyst here, which makes Cronos Group easily avoidable.
Image source: Getty Images.
Aurora Cannabis
Finally, investors would be best-served if they kept their distance from popular millennial-owned pot stock, Aurora Cannabis (NYSE: ACB).
To be clear, Aurora Cannabis' outlook today isn't nearly as bad as it was, say, three months ago. But "less bad" doesn't mean good, which is why it once again finds itself on the naughty list.
Similar to HEXO, Aurora Cannabis is backpedaling on its costs as quickly as it can to achieve positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Positive adjusted EBITDA is a requirement of the company's debt covenants by the end of the first quarter of fiscal 2021 (ended Sept. 30, 2020). By closing five smaller production facilities, selling off the 1-million-square-foot Exeter greenhouse, halting construction on two of its larger projects (Aurora Sun in Alberta and Aurora Nordic 2 in Denmark), and engaging in multiple rounds of layoffs, Aurora should be able to get its selling, general and administrative costs to between CA$40 million and CA$45 million per quarter.
Again, this is good news. But this isn't the news that Aurora investors signed up for. They believed they were buying into a production leader that would have little issue landing long-term export agreements and/or an equity investment. None of this has come to fruition, despite hiring billionaire activist investor Nelson Peltz as a strategic advisor. And Aurora is no longer the projected leader in cannabis output, either.
While we've seen operational improvements for Aurora, there's still a long way to go to fix its broken balance sheet. Aurora's board approved a $350 million (that's U.S.) at-the-market offering in mid-April, signaling to investors that the company's dilutive actions would not cease anytime soon. Meanwhile, goodwill, intangible assets, and property, plant and equipment all look to be line-items that could face significant writedowns in the future.
It's good to see Aurora tackling its operational issues. Next up is that hideous balance sheet. Until that's dealt with, Aurora Cannabis remains a pot stock to avoid.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Finally, investors would be best-served if they kept their distance from popular millennial-owned pot stock, Aurora Cannabis (NYSE: ACB). Like HEXO, Cronos appeared to have a solid growth strategy, especially following a $1.8 billion equity investment from tobacco giant Altria Group (NYSE: MO) that resolved all of its near-term cash concerns. Health Canada delayed the launch of derivative products by two months, and in key provinces like Ontario, an inability to license retail locations led to supply bottlenecks. | Aurora Cannabis Finally, investors would be best-served if they kept their distance from popular millennial-owned pot stock, Aurora Cannabis (NYSE: ACB). In June, HEXO announced a $34.5 million Canadian at-the-market stock offering, which comes after multiple rounds of stock issuances and convertible debt offerings. Cronos Group Another cannabis stock that investors ae going to want to steer clear of in August is Canadian licensed producer Cronos Group (NASDAQ: CRON), which happens to be reporting its second-quarter operating results later this week. | Aurora Cannabis Finally, investors would be best-served if they kept their distance from popular millennial-owned pot stock, Aurora Cannabis (NYSE: ACB). Topping the list of marijuana stocks that investors would be wise to avoid this month is Quebec-based HEXO (NYSE: HEXO). Cronos Group Another cannabis stock that investors ae going to want to steer clear of in August is Canadian licensed producer Cronos Group (NASDAQ: CRON), which happens to be reporting its second-quarter operating results later this week. | Aurora Cannabis Finally, investors would be best-served if they kept their distance from popular millennial-owned pot stock, Aurora Cannabis (NYSE: ACB). Topping the list of marijuana stocks that investors would be wise to avoid this month is Quebec-based HEXO (NYSE: HEXO). But this isn't the news that Aurora investors signed up for. |
37337.0 | 2020-08-02 00:00:00 UTC | Canada Marijuana Industry Output Rises by 11% in May, Hits Year-to-Date High | ACB | https://www.nasdaq.com/articles/canada-marijuana-industry-output-rises-by-11-in-may-hits-year-to-date-high-2020-08-02 | nan | nan | Marijuana is becoming an increasingly important part of the Canadian economy. According to data released Friday by the government's Statistics Canada, the cannabis industry's economic production totaled contributed just over $8.65 billion Canadian ($6.45 billion) in May. That's the highest level recorded so far this year, topping the $8.32 billion ($6.20 billion) of March.
The May figure represented growth of 11% year over year and is in contrast to the country's gross domestic product (GDP) trajectory -- over the same stretch of time, GDP contracted by almost 14%. | Marijuana is becoming an increasingly important part of the Canadian economy. According to data released Friday by the government's Statistics Canada, the cannabis industry's economic production totaled contributed just over $8.65 billion Canadian ($6.45 billion) in May. The May figure represented growth of 11% year over year and is in contrast to the country's gross domestic product (GDP) trajectory -- over the same stretch of time, GDP contracted by almost 14%. | According to data released Friday by the government's Statistics Canada, the cannabis industry's economic production totaled contributed just over $8.65 billion Canadian ($6.45 billion) in May. That's the highest level recorded so far this year, topping the $8.32 billion ($6.20 billion) of March. The May figure represented growth of 11% year over year and is in contrast to the country's gross domestic product (GDP) trajectory -- over the same stretch of time, GDP contracted by almost 14%. | According to data released Friday by the government's Statistics Canada, the cannabis industry's economic production totaled contributed just over $8.65 billion Canadian ($6.45 billion) in May. That's the highest level recorded so far this year, topping the $8.32 billion ($6.20 billion) of March. The May figure represented growth of 11% year over year and is in contrast to the country's gross domestic product (GDP) trajectory -- over the same stretch of time, GDP contracted by almost 14%. | Marijuana is becoming an increasingly important part of the Canadian economy. According to data released Friday by the government's Statistics Canada, the cannabis industry's economic production totaled contributed just over $8.65 billion Canadian ($6.45 billion) in May. That's the highest level recorded so far this year, topping the $8.32 billion ($6.20 billion) of March. |
37338.0 | 2020-08-02 00:00:00 UTC | Better Cannabis Stock: Canopy Growth or Aurora Cannabis? | ACB | https://www.nasdaq.com/articles/better-cannabis-stock%3A-canopy-growth-or-aurora-cannabis-2020-08-02 | nan | nan | After a disastrous 2019, Aurora Cannabis (NYSE: ACB) is rising from the ashes in 2020. In a string of news this year, Aurora surprised investors with the efforts it is making to recover. Management is focused on achieving positive profitability, and all eyes are on this company now.
Meanwhile, Canopy Growth (NYSE: CGC) is also leaving no stone unturned in its efforts to reduce costs and achieve profitability. It could see exciting growth from its new cannabis derivatives products, which have already received some positive customer reviews. Cannabis derivatives are part of October's "cannabis 2.0" legalization in Canada, which made additional recreational products (think cannabis-infused edibles, beverages, chocolates, vapes, and concentrates) legal. "Cannabis 1.0," in 2018, made cannabis flowers, oils, plants, and seeds legal in Canada.
Both companies are working hard to recover from difficult years in 2019. Are either or both likely to succeed this year?
Image Source: Getty Images.
Aurora Cannabis is going all-in
Last year's troubles pulled Aurora's stock down so far that its shares were on the verge of being delisted from the New York Stock Exchange (NYSE). However, quick action using the only option it had (stock dilution) saved the company. Stocks must trade for more than $1 per share to be included on the NYSE; if a stock falls below that level for the duration of a 30-day trading period, it receives a warning notification allowing it time to bring its stock price back up.
Aurora surprised investors with its third-quarter results in May, reporting revenue rising 16% year over year to 75.5 million Canadian dollars. That said, it also reported another quarter of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) losses, which reached CA$45.9 million.
It's imperative now that Aurora become profitable. In the Q3 results, management reassured investors that it will achieve positive EBITDA by the first quarter of fiscal 2021, which ends in September this year. The company has made numerous operational changes to cut costs and reduce expenses to be able to achieve the target. Management expects a reduction of its workforce and restructuring changes at the executive leadership level, as well as the closure of five of its small-scale facilities over the next two quarters, will help it focus on productive endeavors.
Canopy Growth has the upper hand
Though Canopy Growth isn't profitable either, its involvement in the cannabis beverage category gives it an edge over Aurora. Canopy, along with its partner Constellation Brands, plans to launch innovative cannabis-infused beverages, which the company believes will attract an entirely new consumer base.
Recently, Canopy announced that it has received positive consumer responses to its THC-infused ready-to-drink cannabis beverages, namely Tweed Houndstooth & Soda and Tweed Bakerstreet & Ginger, launched in March and April. It has also launched two additional beverages, Houseplant Grapefruit and Deep Space, over the past two months. Canopy believes cannabis beverages could be a "game-changer" for the industry and is ready to take advantage of the market. Meanwhile, Aurora has never hinted at any interest in beverage products.
Accounting and professional services association Deloitte has noted that the Canadian cannabis beverage market could generate close to CA$529 million annually. If these estimates prove right, Canopy might have the upper hand here with beverages, while Aurora Cannabis might fail to benefit.
For now, Canopy has grown revenue 15% year over year to CA$107.9 million for its fourth quarter; that metric is up 76% for fiscal 2020. The company's EBITDA losses came in at CA$102 million for the quarter and CA$442 million for the full year.
Canopy has also attempted quite a few steps to reduce costs under the leadership of CEO David Klein. Shutting down operations in South Africa and Lesotho and closing some facilities in Canada, Colombia, and New York will help the company operate under an asset-light approach.
The choice
Aurora has time and again failed to live up to expectations, so it's still too soon to know whether it's repeating its mistakes this year. Its fourth-quarter results, due Sept. 25, should give us a better idea of whether any or all of its strategies are working.
The opportunities could continue this year in the Canadian cannabis market, with more legal stores opening in Ontario; the total number of retail locations authorized in the province hit 100 last month. That said, actual store openings could take a while because of the regulatory process.
Both companies could benefit from these new locations, as both were struggling last year in part because of lack of legal stores. Demand and production were never issues for either of these players, as they have each made a brand name for their innovative products. But in Canada, a smaller-than-expected number of legal retail outlets boosted the black market, challenging revenue for producers like Aurora and Canopy.
Though revenue does seem to be rising this year, achieving positive EBITDA remains a task for these two. Overall, however, Canopy remains in a better position financially and has a better chance of making profits, considering the advancement of its cannabis derivatives products this year.
ACB data by YCharts
In July, Aurora's stock has fallen 16.9%, while Canopy and the Horizons Marijuana Life Sciences ETF have gained 10.9% and 4.8%, respectively. The market as tracked by the SPDR S&P 500 ETF is up by 5.1% in the same period.
If you are interested in other marijuana stocks besides the popular players, there are at least three other cannabis stocks worth considering for 2020. Between these two big names, however, Canopy Growth would be my choice.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | After a disastrous 2019, Aurora Cannabis (NYSE: ACB) is rising from the ashes in 2020. ACB data by YCharts In July, Aurora's stock has fallen 16.9%, while Canopy and the Horizons Marijuana Life Sciences ETF have gained 10.9% and 4.8%, respectively. Management expects a reduction of its workforce and restructuring changes at the executive leadership level, as well as the closure of five of its small-scale facilities over the next two quarters, will help it focus on productive endeavors. | After a disastrous 2019, Aurora Cannabis (NYSE: ACB) is rising from the ashes in 2020. ACB data by YCharts In July, Aurora's stock has fallen 16.9%, while Canopy and the Horizons Marijuana Life Sciences ETF have gained 10.9% and 4.8%, respectively. Cannabis derivatives are part of October's "cannabis 2.0" legalization in Canada, which made additional recreational products (think cannabis-infused edibles, beverages, chocolates, vapes, and concentrates) legal. | After a disastrous 2019, Aurora Cannabis (NYSE: ACB) is rising from the ashes in 2020. ACB data by YCharts In July, Aurora's stock has fallen 16.9%, while Canopy and the Horizons Marijuana Life Sciences ETF have gained 10.9% and 4.8%, respectively. Cannabis derivatives are part of October's "cannabis 2.0" legalization in Canada, which made additional recreational products (think cannabis-infused edibles, beverages, chocolates, vapes, and concentrates) legal. | After a disastrous 2019, Aurora Cannabis (NYSE: ACB) is rising from the ashes in 2020. ACB data by YCharts In July, Aurora's stock has fallen 16.9%, while Canopy and the Horizons Marijuana Life Sciences ETF have gained 10.9% and 4.8%, respectively. Cannabis derivatives are part of October's "cannabis 2.0" legalization in Canada, which made additional recreational products (think cannabis-infused edibles, beverages, chocolates, vapes, and concentrates) legal. |
37339.0 | 2020-08-01 00:00:00 UTC | Why Robinhood Investors Could Suffer the Most in the Next Market Crash | ACB | https://www.nasdaq.com/articles/why-robinhood-investors-could-suffer-the-most-in-the-next-market-crash-2020-08-01 | nan | nan | When the markets crashed in March, many investors were in panic mode, selling off good and bad investments alike. Ultimately, however, the sell-off offered just a brief glimpse as to how bad things could get, as many stocks began recovering just weeks later. In a prolonged market crash, which is what could happen if there isn't a quick end to the coronavirus pandemic, there won't be a quick recovery.
And that could be bad news, especially for Robinhood investors. Here's why they stand to lose the most if the markets go south.
Many aren't investing for the long term
If you're a long-term investor, you're generally looking at where a company you're investing in will be not just months but years from now. But many Robinhood investors aren't taking that approach and are instead looking for quick wins, and that's dangerous -- especially during a recession and when a market crash may not be far away.
Image source: Getty Images.
Many Robinhood investors are willing to take on high risks in exchange for high rewards in the short term. Hundreds of thousands of investors on the platform are gambling and betting on insolvent companies in the hopes that their stocks will rise in value.
And of course, in the short term, anything can happen. The problem is that if you're caught holding on to the stock of an insolvent business and there's a market crash, you could find yourself with no option but to sell it for a steep loss.
Speculative buys remain popular on Robinhood
Today, many of the top Robinhood picks continue to be airline stocks, including American Airlines and Delta Air Lines, and cruise ship stocks, where businesses are crippled and in danger of going bankrupt. Although they could turn things around, they're definitely high-risk investments.
Cannabis producer Aurora Cannabis (NYSE: ACB) is another high-risk buy that consistently ranks among the top 15 most popular Robinhood stocks. In February, investment bank Ello Capital estimated that Aurora's liquidity levels were among the worst of the Canadian cannabis companies that it evaluated.
The stock was doing so badly this year that it needed a 1:12 reverse split in May just to get back above the NYSE's required minimum $1 share price. Year to date, its shares are down 58%, which is far worse than the Horizons Marijuana Life Sciences ETF (OTC: HMLSF), which has declined by a more modest 19%.
There are several other examples on the Robinhood top 100 list of stocks that are either risky investments, too richly valued, or both, and where investors are betting on sharp turnarounds. But -- again -- these speculative buys look even worse when the markets crash, as investors look for safer investments to hang onto during a bear market. These already risky investments could plunge even lower during a crash.
Just because a stock's fallen heavily in value doesn't mean it can't continue to go lower.
Value investors are in much better shape
For institutional investors and fund managers who look after other people's money, the types of risks Robinhood investors are taking on are simply unacceptable. They can't afford to gamble away their clients' money, and they need to be much more methodical in their investing process.
That normally involves assessing the value a stock offers and looking at its fundamentals. Aurora would be tough to put in any portfolio where value is important. The Alberta-based cannabis company's incurred an operating loss in each of its past 10 reporting periods. And while its shares may appear to be a deal, trading well below their book value, investors should also recall that Aurora wrote down its assets by 1 billion Canadian dollars ($750 million) when it reported its second-quarter results in February. Relying on book value may not be all that useful if the value of the assets is questionable.
Many top Robinhood stocks wouldn't make it past the sniff test for value investors. With a focus more on value and long-term investing, value investors are at less risk to suffer significant losses during a market crash, and their investments would also be more likely to recover.
What should Robinhood investors do?
The good news is that it isn't too late for Robinhood investors to adjust their portfolios and hold some safer stocks while getting rid of speculative ones. This involves not just looking at valuation multiples but assessing which businesses are safe for the foreseeable future. Determining a company's cash situation and evaluating how it's doing during the pandemic are some ways investors can evaluate the safety and stability of a business during these adverse times.
Hype will eventually die down. And if investors jump on the bandwagons of high-risk stocks, they can be left holding some bad investments in their portfolios, which can lead to all-out disaster if the markets crash.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Cannabis producer Aurora Cannabis (NYSE: ACB) is another high-risk buy that consistently ranks among the top 15 most popular Robinhood stocks. And while its shares may appear to be a deal, trading well below their book value, investors should also recall that Aurora wrote down its assets by 1 billion Canadian dollars ($750 million) when it reported its second-quarter results in February. And if investors jump on the bandwagons of high-risk stocks, they can be left holding some bad investments in their portfolios, which can lead to all-out disaster if the markets crash. | Cannabis producer Aurora Cannabis (NYSE: ACB) is another high-risk buy that consistently ranks among the top 15 most popular Robinhood stocks. Speculative buys remain popular on Robinhood Today, many of the top Robinhood picks continue to be airline stocks, including American Airlines and Delta Air Lines, and cruise ship stocks, where businesses are crippled and in danger of going bankrupt. But -- again -- these speculative buys look even worse when the markets crash, as investors look for safer investments to hang onto during a bear market. | Cannabis producer Aurora Cannabis (NYSE: ACB) is another high-risk buy that consistently ranks among the top 15 most popular Robinhood stocks. Many aren't investing for the long term If you're a long-term investor, you're generally looking at where a company you're investing in will be not just months but years from now. Speculative buys remain popular on Robinhood Today, many of the top Robinhood picks continue to be airline stocks, including American Airlines and Delta Air Lines, and cruise ship stocks, where businesses are crippled and in danger of going bankrupt. | Cannabis producer Aurora Cannabis (NYSE: ACB) is another high-risk buy that consistently ranks among the top 15 most popular Robinhood stocks. And that could be bad news, especially for Robinhood investors. But -- again -- these speculative buys look even worse when the markets crash, as investors look for safer investments to hang onto during a bear market. |
37340.0 | 2020-07-30 00:00:00 UTC | 3 Marijuana Stocks to Buy Before They Spark Back Up | ACB | https://www.nasdaq.com/articles/3-marijuana-stocks-to-buy-before-they-spark-back-up-2020-07-30 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Though the mania surrounding the marijuana stocks has dramatically subsided from its 2018 peak, pot stocks still have very dedicated fans on Wall Street. Trading them remains exciting as they constantly go on extended runs, in either direction. There is little doubt these are momentum stocks, which also makes them tricky to trade.
The underlying thesis for investing in cannabis is simple. Fans should simply own the pot stock shares for the long-term and ignore the short term action.
These are intrepid companies working hard to establish a new sector for investors. They have tremendous headwinds, most importantly the fact that marijuana is still illegal at the federal level in the United States.
Eventually this will have to change because it’s unlikely that those states that have legalized pot will reverse their decisions. Therefore, it is very logical to expect that the U.S. will make it federally legal to be in the business of cannabis.
10 Gaming Stocks That Will Power Through the New Normal
Today we examine the three companies that are likely to be there for that headline. Meanwhile, they continuously make headlines of their own in the sector. They are:
Canopy Growth (NYSE:CGC)
Aurora Cannabis (NYSE:ACB)
Cronos (NASDAQ:CRON)
Marijuana Stocks to Own for the Long Term: Canopy Growth (CGC)
Source: Charts by TradingView
Canopy Growth has the most name recognition of the cohort after receiving a $4 billion investment from Constellation Brands (NYSE:STZ) in 2018. This legitimized CGC as the leading company in the field with the best odds of success. Having a massive balance sheet opens a lot of doors. It also makes it a lot easier to overcome the obstacles that it and the others are facing.
The fundamentals are still challenging because many of the original hurdles still exist. However since CGC stock is 68% off its highs, the metrics have improved a great deal. Investors now should have more confidence that most of the froth has been eliminated. The company still loses money, but at least their price-to-sales is a fraction of what it was during the hype bubble. That being said, they are by no means cheap.
Knowing how to read charts makes it much easier to actively trade CGC. Trying to time positions based only on gut nstinct is fraught with danger. Case in point, on Monday I shared a video on the potential upside in CGC stock and it rallied 10% within hours.
Clearly these are wild stocks, so they do make for great trading vehicles. Buying as it approaches $22 per share comes with short-term risk of losses. The stock is coming into a prior fail zone, placing the onus on the bulls to overtake it. The better trade would be to chase the breakout from there, as it invites more momentum buyers to target $26. Conversely, the better entry point is to buy the dip near $17.
Longer-term there’s no reason to short these companies yet, mainly because of the potential legalization headline rally. Bulls have the advantage of time, which makes shorting them with conviction hazardous. Meanwhile there are plenty of trading opportunities available for those who are more active.
Aurora Cannabis (ACB)
Source: Charts by TradingView
Typically I wouldn’t advise you trade stocks doing reverse splits just to remain relevant on Wall Street. ACB stock recently split 1 for 12 in May. But luckily for Aurora, management backed up the maneuver with good headlines.
As a result ACB stock spiked 240%, thereby justifying the stock split, at least for the time-being. Now the bulls have to defend $10 as best as they can so they don’t fade back to the lows from which they just sprang. And they’ve already given back 60% of the rally.
ACB stock still has a strong fanbase among investors. Even though its fundamental metrics are far more reasonable than during its heyday, ACB is almost three times more expensive than CGC and sports a price to sales above 60.
Those are lofty expectations that the bulls have stuffed into today’s stock price. Nevertheless, much like the concept of investing in CGC, here too investors should either believe in it for the long term or simply trade the short-term price action.
10 Gaming Stocks That Will Power Through the New Normal
The closest triggers for that purpose are at $12 and $12.9 for the bulls, versus $10 for the bears. The breach of either of those lines will carry momentum in that direction. The potential size of the breakout could carry ACB stock to $16 where it has a lot of resistance, while the breakdown would risk to close the gap at $6.9. Its is best to wait for the triggers before chasing. Buying ACB near $10 for the long term as an investment is also a viable strategy.
Cronos (CRON)
Source: Charts by TradingView
Of the three companies discussed here, CRON stock is the most expensive, trading at 100 times its full year sales. This is five times more than CGC and almost four times that of ACB.
For an absolute comparison, that’s as high as the price-to-sales of Zoom Video (NASDAQ:ZM). That’s a lot of investors’ hopes for future growth baked into the stock now. This is the equivalent of offering to buy a store for 100 years worth of sales today. That screams overstretched.
Regardless, the stock chart has important information suggesting how far investors are willing to go. It is 70% below its all time high and 70% above the recent March lows.
This is also the volume profile point-of-interest for the last four years. This is the spot where both bulls and bears have been most active, so it is likely to be sticky. The bulls will need to work hard to rally out of it, and the bears will need help from negative headlines to set new lows.
Specifically, there are trigger lines at $7.25 for the buyers and below $6.10 for the sellers. The stock is stuck between resistance and support zones. For the short term, the price action is likely to ping pong inside of said range until the breakout. Long term the thesis here and regardless of valuation is still to buy and hold for the long term success or Cronos.
These marijuana stocks are saddled with all kinds of challenges. This is not only limited to the larger producers like these three but also at the sales outlets for the industry. These tend to be small businesses that are learning on the go how to handle the growth. They are not so different from the potato chip model where wholesalers have to compete for shelf space. This will take time to mature and it looks like they won’t stuff this jack in the box back into its container so might as well accept it.
Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities.
The post 3 Marijuana Stocks to Buy Before They Spark Back Up appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (ACB) Source: Charts by TradingView Typically I wouldn’t advise you trade stocks doing reverse splits just to remain relevant on Wall Street. The potential size of the breakout could carry ACB stock to $16 where it has a lot of resistance, while the breakdown would risk to close the gap at $6.9. They are: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) Marijuana Stocks to Own for the Long Term: Canopy Growth (CGC) Source: Charts by TradingView Canopy Growth has the most name recognition of the cohort after receiving a $4 billion investment from Constellation Brands (NYSE:STZ) in 2018. | They are: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) Marijuana Stocks to Own for the Long Term: Canopy Growth (CGC) Source: Charts by TradingView Canopy Growth has the most name recognition of the cohort after receiving a $4 billion investment from Constellation Brands (NYSE:STZ) in 2018. Aurora Cannabis (ACB) Source: Charts by TradingView Typically I wouldn’t advise you trade stocks doing reverse splits just to remain relevant on Wall Street. ACB stock recently split 1 for 12 in May. | They are: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) Marijuana Stocks to Own for the Long Term: Canopy Growth (CGC) Source: Charts by TradingView Canopy Growth has the most name recognition of the cohort after receiving a $4 billion investment from Constellation Brands (NYSE:STZ) in 2018. Aurora Cannabis (ACB) Source: Charts by TradingView Typically I wouldn’t advise you trade stocks doing reverse splits just to remain relevant on Wall Street. ACB stock recently split 1 for 12 in May. | This is five times more than CGC and almost four times that of ACB. They are: Canopy Growth (NYSE:CGC) Aurora Cannabis (NYSE:ACB) Cronos (NASDAQ:CRON) Marijuana Stocks to Own for the Long Term: Canopy Growth (CGC) Source: Charts by TradingView Canopy Growth has the most name recognition of the cohort after receiving a $4 billion investment from Constellation Brands (NYSE:STZ) in 2018. Aurora Cannabis (ACB) Source: Charts by TradingView Typically I wouldn’t advise you trade stocks doing reverse splits just to remain relevant on Wall Street. |
37341.0 | 2020-07-29 00:00:00 UTC | Why Marijuana Stocks Are Plunging Today | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-are-plunging-today-2020-07-29 | nan | nan | What happened
After notching two straight days of gains, on Wednesday marijuana stocks again obeyed gravity by falling Earthward.
The catalyst was a steep quarterly net loss from Aphria (NASDAQ: APHA), which not only pulled down that stock by 17% but also peers Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Curaleaf (OTC: CURLF), down a respective 9%, 4%, and 3% in late afternoon trading.
Image source: Getty Images.
So what
Aphria's fourth quarter prominently featured a heavy bottom-line loss of 98.8 million Canadian dollars ($73.9 million). That's in stark contrast to the modest profit (CA$5.7 million, or $4.3 million) it booked in in the third quarter and far worse than analysts had estimated.
Although much of it was due to what are basically accounting moves (coronavirus-related impairment charges and a revaluation of convertible debentures), it starkly illustrates the persistent difficulty marijuana companies have in simply turning a net profit.
On top of that, Aphria filed the regulatory paperwork to float up to CA$100 million ($75 million) worth of new stock. Dilutive stock issues are all too common in the marijuana business, and like those constant bottom-line losses, investors are losing patience with them.
Now what
There were positive aspects of Aphria's fourth quarter, such as better-than-expected revenue growth and a cash position that remains strong. But losses and dilution are what jump off the page when looking at the results. Aphria -- and the wider cannabis industry -- needs to get past these negatives to win favor with investors again.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The catalyst was a steep quarterly net loss from Aphria (NASDAQ: APHA), which not only pulled down that stock by 17% but also peers Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Curaleaf (OTC: CURLF), down a respective 9%, 4%, and 3% in late afternoon trading. What happened After notching two straight days of gains, on Wednesday marijuana stocks again obeyed gravity by falling Earthward. Although much of it was due to what are basically accounting moves (coronavirus-related impairment charges and a revaluation of convertible debentures), it starkly illustrates the persistent difficulty marijuana companies have in simply turning a net profit. | The catalyst was a steep quarterly net loss from Aphria (NASDAQ: APHA), which not only pulled down that stock by 17% but also peers Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Curaleaf (OTC: CURLF), down a respective 9%, 4%, and 3% in late afternoon trading. So what Aphria's fourth quarter prominently featured a heavy bottom-line loss of 98.8 million Canadian dollars ($73.9 million). That's in stark contrast to the modest profit (CA$5.7 million, or $4.3 million) it booked in in the third quarter and far worse than analysts had estimated. | The catalyst was a steep quarterly net loss from Aphria (NASDAQ: APHA), which not only pulled down that stock by 17% but also peers Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Curaleaf (OTC: CURLF), down a respective 9%, 4%, and 3% in late afternoon trading. So what Aphria's fourth quarter prominently featured a heavy bottom-line loss of 98.8 million Canadian dollars ($73.9 million). Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | The catalyst was a steep quarterly net loss from Aphria (NASDAQ: APHA), which not only pulled down that stock by 17% but also peers Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Curaleaf (OTC: CURLF), down a respective 9%, 4%, and 3% in late afternoon trading. So what Aphria's fourth quarter prominently featured a heavy bottom-line loss of 98.8 million Canadian dollars ($73.9 million). Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. |
37342.0 | 2020-07-29 00:00:00 UTC | TSX rises 1.08% to 16,294.66 | ACB | https://www.nasdaq.com/articles/tsx-rises-1.08-to-16294.66-2020-07-29 | nan | nan | * The Toronto Stock Exchange's TSX rises 1.08 percent to 16,294.66
* Leading the index were Element Fleet Management Corp , up 12.0%, Celestica Inc CLS.TO, up 11.4%, and Seven Generations Energy Ltd VII.TO, higher by 8.3%.
* Lagging shares were Aphria Inc APHA.TO, down 18.7%, Cameco Corp CCO.TO, down 12.5%, and Aurora Cannabis Inc ACB.TO, lower by 8.8%.
* On the TSX 144 issues rose and 72 fell as a 2-to-1 ratio favored advancers. There were 8 new highs and no new lows, with total volume of 188.3 million shares.
* The most heavily traded shares by volume were Aphria Inc APHA.TO, Kinross Gold Corp K.TO and B2gold Corp BTO.TO.
* The TSX's energy group .SPTTEN rose 1.63 points, or 2.1%, while the financials sector .SPTTFS climbed 2.01 points, or 0.8%.
* West Texas Intermediate crude futures CLc1 rose 0.68%, or $0.28, to $41.32 a barrel. Brent crude LCOc1 rose 1.23%, or $0.53, to $43.75 O/R
* The TSX is off 4.5% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Aphria Inc APHA.TO, down 18.7%, Cameco Corp CCO.TO, down 12.5%, and Aurora Cannabis Inc ACB.TO, lower by 8.8%. * The Toronto Stock Exchange's TSX rises 1.08 percent to 16,294.66 * Leading the index were Element Fleet Management Corp , up 12.0%, Celestica Inc CLS.TO, up 11.4%, and Seven Generations Energy Ltd VII.TO, higher by 8.3%. * On the TSX 144 issues rose and 72 fell as a 2-to-1 ratio favored advancers. | * Lagging shares were Aphria Inc APHA.TO, down 18.7%, Cameco Corp CCO.TO, down 12.5%, and Aurora Cannabis Inc ACB.TO, lower by 8.8%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Kinross Gold Corp K.TO and B2gold Corp BTO.TO. * The TSX's energy group .SPTTEN rose 1.63 points, or 2.1%, while the financials sector .SPTTFS climbed 2.01 points, or 0.8%. | * Lagging shares were Aphria Inc APHA.TO, down 18.7%, Cameco Corp CCO.TO, down 12.5%, and Aurora Cannabis Inc ACB.TO, lower by 8.8%. * The Toronto Stock Exchange's TSX rises 1.08 percent to 16,294.66 * Leading the index were Element Fleet Management Corp , up 12.0%, Celestica Inc CLS.TO, up 11.4%, and Seven Generations Energy Ltd VII.TO, higher by 8.3%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Kinross Gold Corp K.TO and B2gold Corp BTO.TO. | * Lagging shares were Aphria Inc APHA.TO, down 18.7%, Cameco Corp CCO.TO, down 12.5%, and Aurora Cannabis Inc ACB.TO, lower by 8.8%. * The Toronto Stock Exchange's TSX rises 1.08 percent to 16,294.66 * Leading the index were Element Fleet Management Corp , up 12.0%, Celestica Inc CLS.TO, up 11.4%, and Seven Generations Energy Ltd VII.TO, higher by 8.3%. * On the TSX 144 issues rose and 72 fell as a 2-to-1 ratio favored advancers. |
37343.0 | 2020-07-29 00:00:00 UTC | Wall Street Just Upgraded This Popular Cannabis Stock, but You Should Avoid It | ACB | https://www.nasdaq.com/articles/wall-street-just-upgraded-this-popular-cannabis-stock-but-you-should-avoid-it-2020-07-29 | nan | nan | After a string of analyst upgrades in June, shares of cannabis producer Aurora Cannabis (NYSE: ACB) have been receiving a lot of attention. Many investors are excited about the average expectation of a 67% upside for the stock in the next year, based on today's price. Reflecting this enthusiasm, Aurora Cannabis is now the 11th most popular stock on Robinhood, with 442,596 investors holding its shares.
In times like this, however, investing guru Warren Buffett's quotes are usually spot on:
Most people get interested in stocks when every | After a string of analyst upgrades in June, shares of cannabis producer Aurora Cannabis (NYSE: ACB) have been receiving a lot of attention. Many investors are excited about the average expectation of a 67% upside for the stock in the next year, based on today's price. Reflecting this enthusiasm, Aurora Cannabis is now the 11th most popular stock on Robinhood, with 442,596 investors holding its shares. | After a string of analyst upgrades in June, shares of cannabis producer Aurora Cannabis (NYSE: ACB) have been receiving a lot of attention. Many investors are excited about the average expectation of a 67% upside for the stock in the next year, based on today's price. Reflecting this enthusiasm, Aurora Cannabis is now the 11th most popular stock on Robinhood, with 442,596 investors holding its shares. | After a string of analyst upgrades in June, shares of cannabis producer Aurora Cannabis (NYSE: ACB) have been receiving a lot of attention. Many investors are excited about the average expectation of a 67% upside for the stock in the next year, based on today's price. Reflecting this enthusiasm, Aurora Cannabis is now the 11th most popular stock on Robinhood, with 442,596 investors holding its shares. | After a string of analyst upgrades in June, shares of cannabis producer Aurora Cannabis (NYSE: ACB) have been receiving a lot of attention. Many investors are excited about the average expectation of a 67% upside for the stock in the next year, based on today's price. Reflecting this enthusiasm, Aurora Cannabis is now the 11th most popular stock on Robinhood, with 442,596 investors holding its shares. |
37344.0 | 2020-07-29 00:00:00 UTC | Pot producer Aphria posts bigger-than-expected loss | ACB | https://www.nasdaq.com/articles/pot-producer-aphria-posts-bigger-than-expected-loss-2020-07-29 | nan | nan | Recasts, compares with estimates, adds shares, segment details and background
July 29 (Reuters) - Canadian pot producer Aphria APHA.TO, <APHA.O> on Wednesday posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, as coronavirus-related lockdowns disrupted tourism and supply chains.
U.S.-listed shares of the company fell about 4% in premarket trading.
Lack of profitability has been a major concern for cannabis investors as companies have largely failed to deliver on initial promises of boundless growth in the nearly two years since Canada legalized recreational marijuana.
However, net revenue rose more than 18% to C$152.2 million ($113.86 million) as the COVID-19 pandemic led customers to stockpile on cannabis ahead of the lockdowns.
The outbreak has also caused supply issues and delays in new product launches as companies scale back their workforce to essential employees only, while the absence of tourism-related dollars has also been a big worry for cannabis companies.
Aphria took impairment charges of C$64 million in the quarter on the value of its assets in Jamaica, Lesotho, Colombia and Argentina.
The company reported a quarterly net loss of C$98.8 million, or 39 Canadian cents per share, in the three months ended May 31, compared to a profit of C$15.8 million, or 5 Canadian cents per share, a year ago.
On an adjusted basis, the company's loss of 14 Canadian cents was much wider than analysts' average expectation of 4 Canadian cents, according to Refinitiv IBES.
U.S.-listed shares of rivals Aurora Cannabis Inc ACB.TO, ACB.N, Tilray Inc TLRY.O, Canopy Growth Corp WEED.TO, CGC.N and Hexo Corp HEXO.TO, HEXO.N dropped between 1% and 3% in trading before the bell.
($1 = 1.3361 Canadian dollars)
(Reporting by Shariq Khan in Bengaluru; Editing by Amy Caren Daniel)
((Shariq.Khan@thomsonreuters.com; Within U.S.+1 646 223 8780, outside U.S. +91 80 6182 2681; Twitter: @shariqrtrs;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | U.S.-listed shares of rivals Aurora Cannabis Inc ACB.TO, ACB.N, Tilray Inc TLRY.O, Canopy Growth Corp WEED.TO, CGC.N and Hexo Corp HEXO.TO, HEXO.N dropped between 1% and 3% in trading before the bell. Recasts, compares with estimates, adds shares, segment details and background July 29 (Reuters) - Canadian pot producer Aphria APHA.TO, <APHA.O> on Wednesday posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, as coronavirus-related lockdowns disrupted tourism and supply chains. Lack of profitability has been a major concern for cannabis investors as companies have largely failed to deliver on initial promises of boundless growth in the nearly two years since Canada legalized recreational marijuana. | U.S.-listed shares of rivals Aurora Cannabis Inc ACB.TO, ACB.N, Tilray Inc TLRY.O, Canopy Growth Corp WEED.TO, CGC.N and Hexo Corp HEXO.TO, HEXO.N dropped between 1% and 3% in trading before the bell. The company reported a quarterly net loss of C$98.8 million, or 39 Canadian cents per share, in the three months ended May 31, compared to a profit of C$15.8 million, or 5 Canadian cents per share, a year ago. On an adjusted basis, the company's loss of 14 Canadian cents was much wider than analysts' average expectation of 4 Canadian cents, according to Refinitiv IBES. | U.S.-listed shares of rivals Aurora Cannabis Inc ACB.TO, ACB.N, Tilray Inc TLRY.O, Canopy Growth Corp WEED.TO, CGC.N and Hexo Corp HEXO.TO, HEXO.N dropped between 1% and 3% in trading before the bell. Recasts, compares with estimates, adds shares, segment details and background July 29 (Reuters) - Canadian pot producer Aphria APHA.TO, <APHA.O> on Wednesday posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, as coronavirus-related lockdowns disrupted tourism and supply chains. The company reported a quarterly net loss of C$98.8 million, or 39 Canadian cents per share, in the three months ended May 31, compared to a profit of C$15.8 million, or 5 Canadian cents per share, a year ago. | U.S.-listed shares of rivals Aurora Cannabis Inc ACB.TO, ACB.N, Tilray Inc TLRY.O, Canopy Growth Corp WEED.TO, CGC.N and Hexo Corp HEXO.TO, HEXO.N dropped between 1% and 3% in trading before the bell. U.S.-listed shares of the company fell about 4% in premarket trading. Lack of profitability has been a major concern for cannabis investors as companies have largely failed to deliver on initial promises of boundless growth in the nearly two years since Canada legalized recreational marijuana. |
37345.0 | 2020-07-28 00:00:00 UTC | Why Marijuana Stocks Continued to Get High on Tuesday | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-continued-to-get-high-on-tuesday-2020-07-28 | nan | nan | What happened
Extending Monday's rally, shares of some of the top cannabis stocks continued to increase. Two notable Tuesday gainers were Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which blasted nearly 15% and almost 10% higher on the day, respectively.
These companies seem to be propelled by tailwinds of good news, plus anticipated encouraging results from another gainer, peer Aphria (NASDAQ: APHA), which is to report its fourth quarter figures Wednesday morning.
Image source: Getty Images.
So what
Investors seem cheered by some of the moves these companies have been making lately.
Likely realizing that it has enough struggles in North America, Aurora announced last week that it was scaling back its operations in Europe. Canopy Growth, meanwhile, is making a big push into the virtual U.S. cannabidiol (CBD) market by opening an online store for such goods, ShopCanopy.com.
On the macro level, analysts are becoming more bullish on the prospects for recreational marijuana legalization in the U.S. This presupposes, however, that the Democrats sweep the Federal elections this November.
Finally, we have Aphria. The company posted a net profit -- a rare occurrence for weed companies -- while beating estimates in its third quarter. Investors are hopeful that it can repeat at least one of these feats.
Now what
Marijuana stocks as a group have been dogs for investors lately; this recent streak of good news has picked them up from the floor. Whether they can sustain the positive momentum with new, encouraging developments is another matter, though.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Two notable Tuesday gainers were Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which blasted nearly 15% and almost 10% higher on the day, respectively. These companies seem to be propelled by tailwinds of good news, plus anticipated encouraging results from another gainer, peer Aphria (NASDAQ: APHA), which is to report its fourth quarter figures Wednesday morning. Canopy Growth, meanwhile, is making a big push into the virtual U.S. cannabidiol (CBD) market by opening an online store for such goods, ShopCanopy.com. | Two notable Tuesday gainers were Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which blasted nearly 15% and almost 10% higher on the day, respectively. These companies seem to be propelled by tailwinds of good news, plus anticipated encouraging results from another gainer, peer Aphria (NASDAQ: APHA), which is to report its fourth quarter figures Wednesday morning. Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Two notable Tuesday gainers were Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which blasted nearly 15% and almost 10% higher on the day, respectively. These companies seem to be propelled by tailwinds of good news, plus anticipated encouraging results from another gainer, peer Aphria (NASDAQ: APHA), which is to report its fourth quarter figures Wednesday morning. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | Two notable Tuesday gainers were Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which blasted nearly 15% and almost 10% higher on the day, respectively. These companies seem to be propelled by tailwinds of good news, plus anticipated encouraging results from another gainer, peer Aphria (NASDAQ: APHA), which is to report its fourth quarter figures Wednesday morning. And make no mistake – it is coming. |
37346.0 | 2020-07-28 00:00:00 UTC | TSX falls 0.25% to 16,121.32 | ACB | https://www.nasdaq.com/articles/tsx-falls-0.25-to-16121.32-2020-07-28 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.25 percent to 16,121.32
* Leading the index were Canopy Growth Corp , up 14.8%, Aurora Cannabis Inc ACB.TO, up 10.3%, and Home Capital Group Inc HCG.TO, higher by 8.7%.
* Lagging shares were Vermilion Energy Inc VET.TO, down 8.9%, MEG Energy Corp MEG.TO, down 7.0%, and Cenovus Energy Inc CVE.TO, lower by 5.9%.
* On the TSX 110 issues rose and 108 fell as a 1-to-1 ratio favored advancers. There were 9 new highs and no new lows, with total volume of 191.3 million shares.
* The most heavily traded shares by volume were Aphria Inc APHA.TO, Suncor Energy Inc SU.TO and Cenovus Energy Inc CVE.TO.
* The TSX's energy group .SPTTEN fell 2.85 points, or 3.6%, while the financials sector .SPTTFS slipped 1.40 points, or 0.5%.
* West Texas Intermediate crude futures CLc1 fell 1.25%, or $0.52, to $41.08 a barrel. Brent crude LCOc1 fell 0.23%, or $0.1, to $43.31 O/R
* The TSX is off 5.5% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * The Toronto Stock Exchange's TSX falls 0.25 percent to 16,121.32 * Leading the index were Canopy Growth Corp , up 14.8%, Aurora Cannabis Inc ACB.TO, up 10.3%, and Home Capital Group Inc HCG.TO, higher by 8.7%. * On the TSX 110 issues rose and 108 fell as a 1-to-1 ratio favored advancers. * West Texas Intermediate crude futures CLc1 fell 1.25%, or $0.52, to $41.08 a barrel. | * The Toronto Stock Exchange's TSX falls 0.25 percent to 16,121.32 * Leading the index were Canopy Growth Corp , up 14.8%, Aurora Cannabis Inc ACB.TO, up 10.3%, and Home Capital Group Inc HCG.TO, higher by 8.7%. * Lagging shares were Vermilion Energy Inc VET.TO, down 8.9%, MEG Energy Corp MEG.TO, down 7.0%, and Cenovus Energy Inc CVE.TO, lower by 5.9%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Suncor Energy Inc SU.TO and Cenovus Energy Inc CVE.TO. | * The Toronto Stock Exchange's TSX falls 0.25 percent to 16,121.32 * Leading the index were Canopy Growth Corp , up 14.8%, Aurora Cannabis Inc ACB.TO, up 10.3%, and Home Capital Group Inc HCG.TO, higher by 8.7%. * Lagging shares were Vermilion Energy Inc VET.TO, down 8.9%, MEG Energy Corp MEG.TO, down 7.0%, and Cenovus Energy Inc CVE.TO, lower by 5.9%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Suncor Energy Inc SU.TO and Cenovus Energy Inc CVE.TO. | * The Toronto Stock Exchange's TSX falls 0.25 percent to 16,121.32 * Leading the index were Canopy Growth Corp , up 14.8%, Aurora Cannabis Inc ACB.TO, up 10.3%, and Home Capital Group Inc HCG.TO, higher by 8.7%. * Lagging shares were Vermilion Energy Inc VET.TO, down 8.9%, MEG Energy Corp MEG.TO, down 7.0%, and Cenovus Energy Inc CVE.TO, lower by 5.9%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Suncor Energy Inc SU.TO and Cenovus Energy Inc CVE.TO. |
37347.0 | 2020-07-28 00:00:00 UTC | TSX gains on stimulus hopes | ACB | https://www.nasdaq.com/articles/tsx-gains-on-stimulus-hopes-2020-07-28 | nan | nan | July 28 (Reuters) - Canada's main stock index inched higher on Tuesday as investors weighed the prospect of more U.S. stimulus to shore up a pandemic-hit economy against fears of more lockdowns due to a global surge in COVID-19 cases.
* U.S. lawmakers geared up to discuss recovery strategies on Tuesday, a day after Senate Republicans proposed a $1 trillion aid package hammered out with the White House.
* Rising cases of COVID-19 infections in several countries have marked more than 16.57 million cases globally and 654,269 deaths, according to a Reuters tally.
* At 10:24 a.m. ET (14:24 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 12.38 points, or 0.08%, at 16,173.71.
* The energy sector .SPTTEN dropped 1.6% as U.S. crude CLc1 prices were down 1.0% a barrel, while Brent crude LCOc1 lost 0.2%. O/R
* The financials sector .SPTTFS slipped 0.4%. The industrials sector .GSPTTIN fell 0.1%.
* The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, remain unchanged however, gold futures GCc1 fell 0.1% to $1,928.6 an ounce. GOL/MET/L
* On the TSX, 127 issues were higher, while 89 issues declined for a 1.43-to-1 ratio favouring gainers, with 39.49 million shares traded.
* The largest percentage gainers on the TSX were Canopy Growth Corp , which jumped 6.8% and Aurora Cannabis , which rose 6.6%.
* Brookfield Business Partners L.P. fell 4.0%, the most on the TSX, and the second biggest decliner was MEG Energy Corp, down 3.5%.
* The most heavily traded shares by volume were Zenabis Global Inc , up 5%; Aphria Inc , up 5.3% and Aberdeen International Inc , down 25%.
* The TSX posted six new 52-week highs and no new lows.
* Across all Canadian issues there were 24 new 52-week highs and two new lows, with total volume of 94.43 million shares.
(Reporting by Amal S in Bengaluru; Editing by Ramakrishnan M.)
((Amal.S@thomsonreuters.com; within U.S.+1 646 223 8780; outside U.S. +91 80 6749 3677;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | July 28 (Reuters) - Canada's main stock index inched higher on Tuesday as investors weighed the prospect of more U.S. stimulus to shore up a pandemic-hit economy against fears of more lockdowns due to a global surge in COVID-19 cases. * U.S. lawmakers geared up to discuss recovery strategies on Tuesday, a day after Senate Republicans proposed a $1 trillion aid package hammered out with the White House. * The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, remain unchanged however, gold futures GCc1 fell 0.1% to $1,928.6 an ounce. | July 28 (Reuters) - Canada's main stock index inched higher on Tuesday as investors weighed the prospect of more U.S. stimulus to shore up a pandemic-hit economy against fears of more lockdowns due to a global surge in COVID-19 cases. * Rising cases of COVID-19 infections in several countries have marked more than 16.57 million cases globally and 654,269 deaths, according to a Reuters tally. GOL/MET/L * On the TSX, 127 issues were higher, while 89 issues declined for a 1.43-to-1 ratio favouring gainers, with 39.49 million shares traded. | July 28 (Reuters) - Canada's main stock index inched higher on Tuesday as investors weighed the prospect of more U.S. stimulus to shore up a pandemic-hit economy against fears of more lockdowns due to a global surge in COVID-19 cases. * The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, remain unchanged however, gold futures GCc1 fell 0.1% to $1,928.6 an ounce. GOL/MET/L * On the TSX, 127 issues were higher, while 89 issues declined for a 1.43-to-1 ratio favouring gainers, with 39.49 million shares traded. | July 28 (Reuters) - Canada's main stock index inched higher on Tuesday as investors weighed the prospect of more U.S. stimulus to shore up a pandemic-hit economy against fears of more lockdowns due to a global surge in COVID-19 cases. The industrials sector .GSPTTIN fell 0.1%. GOL/MET/L * On the TSX, 127 issues were higher, while 89 issues declined for a 1.43-to-1 ratio favouring gainers, with 39.49 million shares traded. |
37348.0 | 2020-07-28 00:00:00 UTC | 3 Terrible Stocks Robinhood Investors Are Selling (Finally!) | ACB | https://www.nasdaq.com/articles/3-terrible-stocks-robinhood-investors-are-selling-finally-2020-07-28 | nan | nan | This year has truly been a tale of two markets.
During the first quarter, the benchmark S&P 500 was pummeled, losing as much as 34% of its value in a span of 33 calendar days. The coronavirus disease 2019 (COVID-19) pandemic brought an abrupt end to the longest period of economic expansion in recorded U.S. history.
But over the past four months, equities have been virtually unstoppable. The technology-heavy Nasdaq Composite has rocketed to more than two dozen fresh all-time highs, whereas the S&P 500 has recouped pretty much all of its year-to-date losses.
While this volatility is often a great opportunity for long-term investors to buy game-changing companies on the cheap, it's also given rise to the "Robinhood trader."
Image source: Getty Images.
Robinhood investors are finally evicting some bad stocks out of their portfolios
Robinhood is an online investing platform known for offering commission-free trades and free shares of a random stock if you sign up and deposit money into an account. More specifically, Robinhood has attracted a younger and more novice group of members, many of whom don't understand the benefits of long-term investing. As a result, the typical Robinhood trader is viewed as a very short-term investor chasing today's hottest stocks or trends.
Furthermore, Robinhood, like most online brokerages, offers their users the opportunity to utilize margin to leverage their buying power. This can make for supersized gains if an investor is correct, and exacerbate losses if incorrect. Suffice it to say that, historically, chasing a hot trend, using margin, and thinking short-term rarely works out for very long.
With many of its members unable to focus beyond the next tick on a one-day chart, Robinhood's leaderboard (i.e., its most-held stocks) looks like a minefield of awful companies. The good news I can report is that, over the past 30 days, three terrible stocks have started to get the heave-ho out of Robinhood investors' portfolios.
Image source: Getty Images.
Inovio Pharmaceuticals
Because of COVID-19, there hasn't been a hotter industry of late than vaccine developers. Few have delivered more impressive returns than Inovio Pharmaceuticals (NASDAQ: INO), which is up more than 600% year to date, as of this past weekend. Unfortunately, this hot stock brings little substance to the table for shareholders.
On a broader basis, few investors have done well by chasing pumped-up vaccine developers homed in on the next big pandemic threat. Before COVID-19, the vast majority of drugmakers focused on finding therapies to treat Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, the avian bird flu, Zika, and Ebola had fleeting stock gains. The clinical success rate of new therapeutics isn't great, and the sheer number of drug developers aiming to make a vaccine at the moment makes it unlikely that any one company will reap the lion's share of the reward of developing a COVID-19 vaccine.
On a more company-specific level, Inovio has little to show for itself after more than 40 years. Despite reporting positive early stage clinical data on INO-4800, its COVID-19 vaccine candidate, the company still doesn't have a U.S. Food and Drug Administration approval under its belt, and its primary means of raising capital has been through share issuances. A 43-million-share at-the-market offering earlier this year served to line the company's coffers at the expense of shareholders.
Over the past 30 days, no company has been sold out of Robinhood investors' portfolios more than Inovio Pharmaceuticals. Even short-term traders appear to be catching on to Inovio's long history of failing to produce.
Image source: Getty Images.
Aurora Cannabis
Another popular company that's finally starting to get the boot is Canadian marijuana stock Aurora Cannabis (NYSE: ACB). Even though Aurora remains one of the most-held stocks on the Robinhood platform, more than 17,300 net members have sold out of the company over the trailing 30 days.
Operationally, Aurora is attempting to backpedal its way to positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). It's halted construction on two of its largest cultivation facilities, sold a 1-million-square-foot greenhouse that it never took the time to retrofit for pot production, and has closed five of its smaller grow farms. Further, multiple rounds of layoffs were enacted, all in an effort to reduce selling, general, and administrative expenses.
While these operational moves were long overdue, they don't resolve all of Aurora Cannabis' problems. Similar to Inovio, Aurora's primary means of accessing capital has been to sell its common stock. Taking into account the company's 1-for-12 reverse split that was enacted on May 11 to avoid delisting from the New York Stock Exchange, Aurora's share count has ballooned from 1.3 million to at least 112 million in six years.
Aurora Cannabis is also lugging around $2.42 billion Canadian in goodwill, accounting for 51% of its total assets. There's a real chance that more than half of Aurora's total assets need to be written down. It would certainly appear that some Robinhood investors are starting to wise up on Aurora Cannabis.
Image source: Getty Images.
Hertz Global
Car rental company Hertz (NYSE: HTZ) is another head-scratcher of a holding that, for a period of time, has been especially popular among Robinhood members. I say "head-scratcher" because Hertz's popularity spiked after the company filed for Chapter 11 bankruptcy protection in May. But over the trailing 30 days, more than 16,400 net members have closed out their positions.
Initially, Hertz's stock soared on the prospect of the company issuing approximately $500 million worth of common stock during its bankruptcy proceedings. Then, rumors began to swirl that bidders might be interested in scooping up bits and pieces of Hertz, including its fleet of vehicles. However, neither of these catalysts came to fruition.
What shareholders are left with is a company that's going to need to sell approximately 182,000 cars in the coming months to help reduce its outstanding debt and satisfy the company's bondholders. Even though Hertz looks to be on track to emerge from bankruptcy as a leaner company, it's unclear whether shareholders will have any equity stake left. Even the company stated in a Securities and Exchange Commission filing that its stock could well be worthless.
As the icing on the cake, Hertz is facing a possible delisting from the New York Stock Exchange. Put plainly, there isn't a single good reason to be a Hertz shareholder right now.
10 stocks we like better than Aurora Cannabis Inc.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Another popular company that's finally starting to get the boot is Canadian marijuana stock Aurora Cannabis (NYSE: ACB). With many of its members unable to focus beyond the next tick on a one-day chart, Robinhood's leaderboard (i.e., its most-held stocks) looks like a minefield of awful companies. Despite reporting positive early stage clinical data on INO-4800, its COVID-19 vaccine candidate, the company still doesn't have a U.S. Food and Drug Administration approval under its belt, and its primary means of raising capital has been through share issuances. | Aurora Cannabis Another popular company that's finally starting to get the boot is Canadian marijuana stock Aurora Cannabis (NYSE: ACB). Robinhood investors are finally evicting some bad stocks out of their portfolios Robinhood is an online investing platform known for offering commission-free trades and free shares of a random stock if you sign up and deposit money into an account. Over the past 30 days, no company has been sold out of Robinhood investors' portfolios more than Inovio Pharmaceuticals. | Aurora Cannabis Another popular company that's finally starting to get the boot is Canadian marijuana stock Aurora Cannabis (NYSE: ACB). Robinhood investors are finally evicting some bad stocks out of their portfolios Robinhood is an online investing platform known for offering commission-free trades and free shares of a random stock if you sign up and deposit money into an account. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Sean Williams has no position in any of the stocks mentioned. | Aurora Cannabis Another popular company that's finally starting to get the boot is Canadian marijuana stock Aurora Cannabis (NYSE: ACB). Over the past 30 days, no company has been sold out of Robinhood investors' portfolios more than Inovio Pharmaceuticals. Even though Aurora remains one of the most-held stocks on the Robinhood platform, more than 17,300 net members have sold out of the company over the trailing 30 days. |
37349.0 | 2020-07-26 00:00:00 UTC | Better Marijuana Stock: Aurora Cannabis vs. Aphria | ACB | https://www.nasdaq.com/articles/better-marijuana-stock%3A-aurora-cannabis-vs.-aphria-2020-07-26 | nan | nan | Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) were reportedly in talks to merge not long ago. But those discussions fell apart, leaving Aurora and Aphria to continue going their separate ways.
Neither of those ways has been much to get excited about so far this year. Aphria's shares are still down a little year to date after mounting a solid comeback from the major market meltdown in February and March. Aurora has also rebounded somewhat, but its shares are still down nearly 60% year to date.
Which of these two Canadian marijuana stocks is the better pick for investors now? Here's the good, the bad, and the ugly for Aurora and Aphria.
Image source: Getty Images.
The scoop on Aurora Cannabis
Let's start off by addressing why Aurora stock continues to languish. The most important reason is that the company is losing a lot of money. That issue leads to other problems, namely the prospects of more dilution-causing stock offerings and a huge debt to service. It also doesn't help matters that Aurora doesn't have a permanent (or at least semi-permanent) CEO in place nearly six months after founder and former CEO Terry Booth stepped down.
We could discuss Aurora's problems at length. But the cannabis producer does have some positives, too. For example, Aurora's Q3 sales announced in May were a lot better than expected. That could be a sign that the company is turning things around. In fact, Aurora tracked in the right direction in Q3 on all of the key metrics the management team uses to measure the company's performance.
Aurora has definitely made significant progress in reducing its expenses. It has cut 25% of support staff and 30% of production staff. The company is shutting down five smaller facilities. These efforts could put the company on a path to deliver positive cash flow and adjusted EBITDA in the near future.
While Aurora has been busy rightsizing its operations, the potential for the global cannabis market remains high. Canada's pot sales should increase as the Cannabis 2.0 cannabis derivatives market picks up momentum. Medical cannabis markets in Europe continue to expand.
Aurora at long last has even entered the U.S. In May, the company acquired Reliva, one of the top-selling cannabidiol (CBD) brands in the U.S.
Aphria's pros and cons
We only have to look at Aphria's balance sheet to spot one key problem for the company. Its long-term debt topped 130.6 million in Canadian dollars at the end of February. The company also had nearly CA$335 million in convertible debentures. Combined, that's a pretty large dark cloud hovering over Aphria, which generated net income of only CA$5.7 million in its latest quarter.
That profit, by the way, isn't quite as good as it might seem. Aphria recorded a fair value adjustment on growth of biological assets in Q3 of nearly CA$40.3 million. Without that adjustment, the company would have posted a loss for the quarter.
But there are several things to like about Aphria. The company has generated four consecutive quarters of positive adjusted EBITDA, an accomplishment most of its peers can't claim. It has also strengthened its balance sheet by buying back around CA$127.5 million of senior convertible notes in exchange for a combination of stock and cash.
Aphria's medical and recreational marijuana sales in Canada continue to grow. Like Aurora, the company should benefit as the country's Cannabis 2.0 market grows. Aphria CEO Irwin Simon stated in the fiscal 2020 Q3 conference call in April that the company has a "77% share across all brands on vapes in Ontario." He also said that Aphria had three of the top five brands in Ontario in March. Those are solid achievements considering that Ontario is Canada's largest cannabis market.
In addition, Aphria's acquisition of CC Pharma last year gives it a strong position in the German medical cannabis market. The pharmaceutical distributor continues to generate exceptional sales growth and provides Aphria a steady source of cash flow.
Better marijuana stock
My view is that it's not much of a contest between these two marijuana stocks. I think that Aphria is the hands-down winner.
Aphria already consistently delivers positive adjusted EBITDA while that's still an aspirational goal for Aurora. Aphria has a strong CEO with an impressive track record in the consumer goods industry. Aurora is still looking for a new CEO. Despite its debt, Aphria also has a stronger balance sheet than Aurora does.
Like most marijuana stocks, Aphria could be too risky for some investors. But I suspect that aggressive investors will find Aphria more attractive than Aurora.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) were reportedly in talks to merge not long ago. Combined, that's a pretty large dark cloud hovering over Aphria, which generated net income of only CA$5.7 million in its latest quarter. It has also strengthened its balance sheet by buying back around CA$127.5 million of senior convertible notes in exchange for a combination of stock and cash. | Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) were reportedly in talks to merge not long ago. These efforts could put the company on a path to deliver positive cash flow and adjusted EBITDA in the near future. Aphria's medical and recreational marijuana sales in Canada continue to grow. | Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) were reportedly in talks to merge not long ago. The scoop on Aurora Cannabis Let's start off by addressing why Aurora stock continues to languish. In May, the company acquired Reliva, one of the top-selling cannabidiol (CBD) brands in the U.S. Aphria's pros and cons We only have to look at Aphria's balance sheet to spot one key problem for the company. | Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) were reportedly in talks to merge not long ago. Aphria's medical and recreational marijuana sales in Canada continue to grow. Better marijuana stock My view is that it's not much of a contest between these two marijuana stocks. |
37350.0 | 2020-07-26 00:00:00 UTC | Why Aurora Cannabis Should Get Out of Europe and Other International Markets | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-should-get-out-of-europe-and-other-international-markets-2020-07-26 | nan | nan | Aurora Cannabis (NYSE: ACB) is working hard to tighten up its operations and bring down expenses in an effort to reduce its cash burn while also getting closer to breakeven. On July 20, investors learned that the company would again be laying off staff -- this time from its European operations. In addition to laying off one-quarter of its staff in certain countries, Aurora will also eliminate its regional office in Europe.
However, a better move for the company would be to simply close up shop in Europe and other international markets entirely, and here's why.
The markets outside North America are too small
Europe's one of the more appealing pot markets outside of North America, but unfortunately, that's not saying a whole lot. In 2019, the entire European cannabis market was worth just $260 million.
Image source: Getty Images.
By comparison, in Canada's first year with the recreational market open for business, sales totaled 908 million Canadian dollars ($677 million USD), and that was with many bumps along the way. In April 2019, research company BDS Analytics projected that the Canadian market would be worth $5.2 billion in 2024.
And while it may take years before marijuana is legal across the U.S., it's likely well worth the wait. From January through to May of this year, the state of Colorado alone generated more than $779 million in marijuana sales. Retail cannabis sales (both medical and recreational) for the U.S. are on track to hit $15 billion this year, a 40% increase from a year ago, and they could hit $37 billion in 2024.
For Aurora investors, the temptation is to look at the potential value of where the European market will be years from now, but the reality is that no one can be certain how things will play out. One forecast by research company Prohibition Partners in 2018 projected that the European cannabis market will soar to a value of 115.7 billion euros ($135 billion USD) by 2028. But a big caveat is that that estimate assumes there will be widespread legalization in Europe over the next eight years, which is far from a guarantee.
While countries are moving toward legalizing cannabis for medical use, let's not forget that recreational use is still only legal in Canada and Uruguay. It's hard enough forecasting the pot market for one country, let alone 28, especially so far in advance.
Prohibition also estimates that in Oceania, the cannabis market will reach a market size of $1.55 billion by 2024.
Aurora should take a different approach
Aurora's been focused on international expansion for a while now, and it's made the stock one of the worst cannabis investments out there. In just one year, its stock has lost more than 86% of its value, while the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) is down 58% over the same period.
The Alberta-based pot producer's playing the long game, but if it doesn't strengthen its financial position soon, it may not be around to see other markets around the globe reach their potential. In each of its past 10 quarters, Aurora's been unable to generate positive cash flow from its day-to-day operating activities, and it's had to issue both debt and equity to keep the cash coming in.
That's why, instead of being overaggressive and expanding into any market that it can find, Aurora may want to take a page out of Trulieve Cannabis's (OTC: TCNNF) book and opt for a more conservative growth strategy. The Florida-based company's focused on dominating its home market, where it has more than 50 dispensaries throughout the state. That's helped Trulieve record profits in seven straight quarters, and it's been one of the better pot stocks to buy, with its share price up 55% in 12 months.
By abandoning Europe and other international markets, Aurora can trim lots of overhead associated with its operations abroad and come closer to breakeven while focusing on its domestic operations. The cannabis company needs to take more drastic measures to improve its bottom line, and that means taking a heavier-handed approach to cost-cutting. By completely pulling out of markets rather than laying off staff, it can do just that.
Until it makes drastic changes, Aurora will remain a risky buy
Aurora's reported a net loss in five of its past six quarters. The company needs to make bigger moves to strengthen its financials, and until that happens, it's just too risky of an investment.
Although the stock may appear to be a cheap buy, trading at below its book value and a price-to-sales multiple of about 5, that's because many investors have lost hope in Aurora and are too tired of its disappointing results to pay any sort of premium for the shares. Unless you're OK with taking on a lot of risk, you should stay far away from Aurora's stock.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) is working hard to tighten up its operations and bring down expenses in an effort to reduce its cash burn while also getting closer to breakeven. That's why, instead of being overaggressive and expanding into any market that it can find, Aurora may want to take a page out of Trulieve Cannabis's (OTC: TCNNF) book and opt for a more conservative growth strategy. Although the stock may appear to be a cheap buy, trading at below its book value and a price-to-sales multiple of about 5, that's because many investors have lost hope in Aurora and are too tired of its disappointing results to pay any sort of premium for the shares. | Aurora Cannabis (NYSE: ACB) is working hard to tighten up its operations and bring down expenses in an effort to reduce its cash burn while also getting closer to breakeven. By comparison, in Canada's first year with the recreational market open for business, sales totaled 908 million Canadian dollars ($677 million USD), and that was with many bumps along the way. One forecast by research company Prohibition Partners in 2018 projected that the European cannabis market will soar to a value of 115.7 billion euros ($135 billion USD) by 2028. | Aurora Cannabis (NYSE: ACB) is working hard to tighten up its operations and bring down expenses in an effort to reduce its cash burn while also getting closer to breakeven. One forecast by research company Prohibition Partners in 2018 projected that the European cannabis market will soar to a value of 115.7 billion euros ($135 billion USD) by 2028. Aurora should take a different approach Aurora's been focused on international expansion for a while now, and it's made the stock one of the worst cannabis investments out there. | Aurora Cannabis (NYSE: ACB) is working hard to tighten up its operations and bring down expenses in an effort to reduce its cash burn while also getting closer to breakeven. On July 20, investors learned that the company would again be laying off staff -- this time from its European operations. And while it may take years before marijuana is legal across the U.S., it's likely well worth the wait. |
37351.0 | 2020-07-26 00:00:00 UTC | 2 Top Pot Stocks to Buy in a Recession | ACB | https://www.nasdaq.com/articles/2-top-pot-stocks-to-buy-in-a-recession-2020-07-26 | nan | nan | In a recession, deciding on which stocks to hold in your portfolio can be a challenging task. You need to look for companies that sell products and services that will continue to be in demand during a recession and that also have reasonably priced shares (to minimize the chance of a large correction taking place). There are solid pot stocks that fit the above criteria. Below are two companies that look to be great investments, even if the economy isn't doing well.
1. GW Pharmaceuticals
GW Pharmaceuticals (NASDAQ: GWPH) is on this list for a number of reasons. The company is growing at a great rate, its stock isn't far from breakeven, and its top product is a cannabidiol (CBD)-based drug that's essential for its patients, which means demand isn't likely to waiver.
Image source: Getty Images.
The U.K.-based company released its first-quarter results on May 11. Its sales of $120.6 million were nearly triple the $39.2 million in revenue that GW reported in the prior-year period. And while it reported a loss of $8 million, that was still nowhere as bad as the $50.1 million loss the company incurred the same time last year.
That's great news, because even if GW suffers a decline in revenue, its results could still look strong given how well it's been growing. Moreover, the importance of its CBD-based drug Epidiolex makes it unlikely there will be a significant decline in sales even during a recession. The drug is too vital to the health and wellness of its patients, many of whom are children with one of the two rare forms of epilepsy for which the U.S. Food and Drug Administration (FDA) has approved the drug: Dravet syndrome and Lennox-Gastaut syndrome.
When it comes to a recession, it's important to focus on investing in companies that will have unwavering demand for their products. A drug like Epidiolex is a necessity, especially for children who need the medication to help treat their seizures.
Year to date, shares of GW are up by more than 23%, while the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) is down 21% over the same period.
2. Trulieve
Trulieve Cannabis (OTC: TCNNF) makes the list for the same reason GW does: For many of its patients, Trulieve's products are essential. If people are out of work and no longer have health insurance coverage due to the recession, medical marijuana can be a relatively cheap alternative for pain relief, especially for seniors.
Trulieve is the dominant brand in its home state of Florida, where 53 of its 55 dispensaries operate. The next closest competitor in the market, Surterra Wellness, operates 39 dispensing locations within the state. More than one-fifth of the state's population is at least 65 years old, meaning Trulieve's in an excellent position to meet the medical marijuana needs of seniors in Florida.
The pot producer released its first-quarter results of 2020 on May 20. Its sales of $96.1 million were more than double the $44.5 million recorded in Q1 2019. Like GW, Trulieve's experiencing strong growth. And while its growth rate may not be as strong as GW's is right now, Trulieve's stronger bottom line makes up for it, with the company reporting profits in seven straight quarters.
Year to date, Trulieve's stock is up 28%.
Which stock is the better buy?
Before deciding which of these two stocks is better, let's look at their price-to-sales ratios compared with some of their peers:
GWPH PS Ratio data by YCharts
GW is a bit on the expensive side, but remember, this is a company that's still experiencing significant revenue growth, which could result in that ratio declining as the year goes on. What matters here is that neither stock is trading at an obscene multiple relative to its peers.
While Trulieve may be the more tempting buy from a valuation perspective, I'd wager that GW would perform slightly better during a recession than Trulieve. But that's only because as disposable incomes start to dry up, consumers will try to cut all but the essential expenses. And a drug that treats seizures, particularly in children, is as essential as it gets.
That's why despite a more expensive valuation (for now), GW's stock gets the edge for investors looking for a cannabis investment that's safe to hold during a recession.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | You need to look for companies that sell products and services that will continue to be in demand during a recession and that also have reasonably priced shares (to minimize the chance of a large correction taking place). If people are out of work and no longer have health insurance coverage due to the recession, medical marijuana can be a relatively cheap alternative for pain relief, especially for seniors. And while its growth rate may not be as strong as GW's is right now, Trulieve's stronger bottom line makes up for it, with the company reporting profits in seven straight quarters. | GW Pharmaceuticals GW Pharmaceuticals (NASDAQ: GWPH) is on this list for a number of reasons. Trulieve Trulieve Cannabis (OTC: TCNNF) makes the list for the same reason GW does: For many of its patients, Trulieve's products are essential. Like GW, Trulieve's experiencing strong growth. | The company is growing at a great rate, its stock isn't far from breakeven, and its top product is a cannabidiol (CBD)-based drug that's essential for its patients, which means demand isn't likely to waiver. Trulieve Trulieve Cannabis (OTC: TCNNF) makes the list for the same reason GW does: For many of its patients, Trulieve's products are essential. Before deciding which of these two stocks is better, let's look at their price-to-sales ratios compared with some of their peers: GWPH PS Ratio data by YCharts GW is a bit on the expensive side, but remember, this is a company that's still experiencing significant revenue growth, which could result in that ratio declining as the year goes on. | That's great news, because even if GW suffers a decline in revenue, its results could still look strong given how well it's been growing. Moreover, the importance of its CBD-based drug Epidiolex makes it unlikely there will be a significant decline in sales even during a recession. Trulieve Trulieve Cannabis (OTC: TCNNF) makes the list for the same reason GW does: For many of its patients, Trulieve's products are essential. |
37352.0 | 2020-07-25 00:00:00 UTC | 3 Pot Stocks That Could Become Big Winners in 2020 | ACB | https://www.nasdaq.com/articles/3-pot-stocks-that-could-become-big-winners-in-2020-2020-07-25 | nan | nan | Many cannabis companies have fallen out of favor over the past few months amid growing financial losses and other issues. However, there are a few businesses out there that are not only doing surprisingly well for themselves, but remain just as promising for investors as they were before this coronavirus pandemic began.
If you're looking to invest in a handful of high-quality cannabis stocks but aren't sure where to look, here are three companies that you should seriously consider adding to your portfolio in 2020.
Image source: Getty Images.
1. Village Farms International
Village Farms International (NASDAQ: VFF) is one of the more interesting small-cap cannabis companies on the market. Originally a produce company struggling in the historically margin-thin vegetable market, Village Farms ended up making a strategic shift into growing marijuana instead.
Despite the company's small market cap of only $340 million, Village Farms has earned a reputation for being one of the most cost-effective growers on the market. A big reason for that has to do with Pure Sunfarms, a highly efficient cultivation operation in which Village Farms owns a majority stake.
Total cannabis cultivation costs came in at $0.64 per gram for its first fiscal quarter, a massive improvement from the $1.04 per gram seen in Q1 2019. That's remarkably cheap by industry standards, and it makes Village Farms competitive with many of the largest cannabis companies on the market.
Village Farms is also one of the few cannabis companies that have been consistently profitable. The company reported a net income of $4.2 million in Q1 2020, marking the fifth consecutive profitable quarter for the business. Despite this, the company trades at a modest 2.1 price-to-sales (P/S) ratio -- quite cheap, even within the cannabis industry.
Pure Sunfarms is already one of the leading cannabis brands in Canada's largest provincial market, Ontario, and is already the top-selling brand in terms of dried flower sales. Despite being a smaller company overall, Village Farms is handily competing with the big names in the cannabis industry.
Image source: Getty Images.
2. Curaleaf
In the U.S., Curaleaf Holdings (OTC: CURLF) is one of the largest multistate operators (MSOs) on the market. While still not profitable yet -- fiscal fourth-quarter losses came in at $15.1 million -- Curaleaf has been growing at a very fast pace. Quarterly revenues are at $105 million, up 29% from the previous quarter and 158% higher than the same period last year. At the same time, Curaleaf's portfolio of 57 operational dispensaries makes it one of the largest MSOs in the U.S. in terms of retail presence.
Curaleaf is also in the midst of acquiring another MSO, Grassroots, in a deal that would make Curaleaf the world's largest cannabis company in terms of combined revenue. The deal would expand Curaleaf's presence from 18 to 23 states, with a portfolio of 135 dispensary licenses as well as 88 operational dispensaries.
The big question for Curaleaf is when exactly it expects to start making a profit. If investors have learned anything from the decline of other large cannabis companies like Aurora Cannabis (NYSE: ACB), it's that endless growth can't justify a lack of profitability forever.
The good news is that the rest of the company's financials are quite healthy. Among other issues, many marijuana companies ended up with gargantuan goodwill figures on the books after making acquisitions in 2019 and earlier. These same companies faced major losses when they had to make goodwill adjustments earlier this year. In contrast, Curaleaf has about $573.8 million in goodwill and intangible assets compared with its $3.9 billion market cap.
That's pretty good, considering just how much Curaleaf has expanded in the past via acquisitions. In comparison, Aurora Cannabis' goodwill and intangible assets still total about $2.9 billion, totally eclipsing its $1.3 billion market cap.
Image source: Getty Images.
3. Aphria
While Aphria (NASDAQ: APHA) used to be one of the underdogs in the Canadian cannabis industry, the company has had an impressive comeback recently. Over the past four months, shares of Aphria have more than doubled. In comparison, the Nasdaq is up 55% over the same time frame.
This jump isn't totally surprising, especially because many investors have argued that Aphria was undervalued considering its financial results. Aphria has been one of the few profitable cannabis companies in the past. In its recent third-quarter 2020 financial results, the company reported $5.7 million net income on $144.4 million in total revenue. In comparison to the same time last year, Aphria's revenue figures have almost doubled.
The bulk of Aphria's revenue doesn't come from Canadian cannabis sales, but instead stems from its German distribution subsidiary, CC Pharma. About $88.3 million in income during Aphria's most recent quarter came from distribution revenue, in comparison to the $64.4 million brought in by cannabis sales.
Considering Aphria's dependence on international revenue from CC Pharma, many investors were worried that the European Union could end up closing borders to slow down the spread of the coronavirus. While Aphria ended up suspending its 2020 guidance earlier this year due to this possibility, it seems right now that this kind of border closure won't be necessary after all.
Overall, Aphria has emerged from the first half of 2020 stronger than many of its competitors. With continued revenue growth and a positive bottom line, Aphria's in a pretty enviable position.
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Mark Prvulovic has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | If investors have learned anything from the decline of other large cannabis companies like Aurora Cannabis (NYSE: ACB), it's that endless growth can't justify a lack of profitability forever. Originally a produce company struggling in the historically margin-thin vegetable market, Village Farms ended up making a strategic shift into growing marijuana instead. A big reason for that has to do with Pure Sunfarms, a highly efficient cultivation operation in which Village Farms owns a majority stake. | If investors have learned anything from the decline of other large cannabis companies like Aurora Cannabis (NYSE: ACB), it's that endless growth can't justify a lack of profitability forever. Village Farms International Village Farms International (NASDAQ: VFF) is one of the more interesting small-cap cannabis companies on the market. In comparison, Aurora Cannabis' goodwill and intangible assets still total about $2.9 billion, totally eclipsing its $1.3 billion market cap. | If investors have learned anything from the decline of other large cannabis companies like Aurora Cannabis (NYSE: ACB), it's that endless growth can't justify a lack of profitability forever. Village Farms International Village Farms International (NASDAQ: VFF) is one of the more interesting small-cap cannabis companies on the market. That's remarkably cheap by industry standards, and it makes Village Farms competitive with many of the largest cannabis companies on the market. | If investors have learned anything from the decline of other large cannabis companies like Aurora Cannabis (NYSE: ACB), it's that endless growth can't justify a lack of profitability forever. Village Farms is also one of the few cannabis companies that have been consistently profitable. At the same time, Curaleaf's portfolio of 57 operational dispensaries makes it one of the largest MSOs in the U.S. in terms of retail presence. |
37353.0 | 2020-07-24 00:00:00 UTC | TSX falls 0.13% to 15,997.06 | ACB | https://www.nasdaq.com/articles/tsx-falls-0.13-to-15997.06-2020-07-24 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.13 percent to 15,997.06 * Leading the index were Yamana Gold Inc , up 9.3%, Wheaton Precious Metals Corp , up 5.6%, and Lundin Gold Inc , higher by 4.4%. * Lagging shares were ECN Capital Corp , down 4.6%, Ero Copper Corp , down 3.6%, and Aurora Cannabis Inc , lower by 3.4%. * On the TSX 72 issues rose and 146 fell as a 0.5-to-1 ratio favored decliners. There were 4 new highs and no new lows, with total volume of 166.5 million shares. * The most heavily traded shares by volume were Royal Bank Of Canada , Yamana Gold Inc and Suncor Energy Inc . * The TSX's energy group fell 0.13 points, or 0.2%, while the financials sector slipped 2.52 points, or 0.9%. * West Texas Intermediate crude futures rose 0.66%, or $0.27, to $41.34 a barrel. Brent crude rose 0.07%, or $0.03, to $43.34 [O/R] * The TSX is off 6.2% for the year. Keywords: CANADA STOCKS/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * On the TSX 72 issues rose and 146 fell as a 0.5-to-1 ratio favored decliners. * The most heavily traded shares by volume were Royal Bank Of Canada , Yamana Gold Inc and Suncor Energy Inc . * West Texas Intermediate crude futures rose 0.66%, or $0.27, to $41.34 a barrel. | * The Toronto Stock Exchange's TSX falls 0.13 percent to 15,997.06 * Leading the index were Yamana Gold Inc , up 9.3%, Wheaton Precious Metals Corp , up 5.6%, and Lundin Gold Inc , higher by 4.4%. * The most heavily traded shares by volume were Royal Bank Of Canada , Yamana Gold Inc and Suncor Energy Inc . * The TSX's energy group fell 0.13 points, or 0.2%, while the financials sector slipped 2.52 points, or 0.9%. | * The Toronto Stock Exchange's TSX falls 0.13 percent to 15,997.06 * Leading the index were Yamana Gold Inc , up 9.3%, Wheaton Precious Metals Corp , up 5.6%, and Lundin Gold Inc , higher by 4.4%. * The most heavily traded shares by volume were Royal Bank Of Canada , Yamana Gold Inc and Suncor Energy Inc . * The TSX's energy group fell 0.13 points, or 0.2%, while the financials sector slipped 2.52 points, or 0.9%. | * On the TSX 72 issues rose and 146 fell as a 0.5-to-1 ratio favored decliners. * The most heavily traded shares by volume were Royal Bank Of Canada , Yamana Gold Inc and Suncor Energy Inc . Brent crude rose 0.07%, or $0.03, to $43.34 [O/R] * The TSX is off 6.2% for the year. |
37354.0 | 2020-07-23 00:00:00 UTC | Aurora Cannabis (ACB): Beneficial Canadian Cannabis Consolidation Ahead | ACB | https://www.nasdaq.com/articles/aurora-cannabis-acb%3A-beneficial-canadian-cannabis-consolidation-ahead-2020-07-23 | nan | nan | The Canadian cannabis market has long been over supplied and under stored. The public companies have needed to consolidate in order to reduce supplies and brands to eliminate stiff competition.
A recent merger discussion between two of the three leading Canadian cannabis companies could provide substantial synergies and plenty of upside to the shareholders of Aurora Cannabis (ACB) and Aphria (APHA). A deal might not happen between these two companies, but the consolidation in the cannabis sector will ultimately help Aurora Cannabis.
Mega Merger
For most sectors, a merger between Aurora Cannabis and Aphria wouldn’t be considering a mega merger. The stocks both have market valuations below $1.5 billion, but these companies are now the leading cannabis sellers in Canada.
These stocks only trail the behemoth Canopy Growth in total sales for Canadian cannabis companies, but the later obtains substantial sales outside the Canadian cannabis market. While Aurora Cannabis and Aphria reported mostly Canadian cannabis sales in the last quarter with Aurora at C$70 million and Aphria at C$57 million, Aphria does have a large German medical distribution business not generally included in valuation discussions due to the low value and growth potential of the business.
The merger talks have supposedly broken down, but investors should prepare for a deal in the sector involving these companies. The suggested C$200 million in synergies and the appointment of Aphria CEO Irwin Simon would place the combined entity in a very enviable position.
With Canopy Growth still reporting large EBITDA losses into the future and the general Canadian cannabis sector all losing money, a strong CEO in charge that has turned Aphria into an EBITDA positive business would be a huge positive. The combined entity could demand a premium price.
Deal Upside
The combined company only has a market value of $2.7 billion while Canopy Growth is up at $6.4 billion. The new company would match the leading Canadian cannabis company with sales while far out pacing Canopy Growth on EBITDA profits.
At this point, cannabis investors should be done with focusing on sales growth potential. The key to this deal is the ability to take the scale of this entity and generate massive profits.
Aphria has targeted EBITDA profits of C$40 million for the fiscal year ended in May while Aurora Cannabis recently cut SG&A costs to below C$45 million quarterly and plans EBITDA profits in the current quarter. The C$200 million in cost savings could leave a combined business with up to C$750 million in 2021 cannabis sales. If EBITDA margins reached 20%, the new entity would reach C$150 million with potential upside.
In addition, these companies both lack CPG partners making a large deal very possible in the future. Even EBITDA targets of C$250 million, a stock trading at 20x EBITDA would produce a near double for shareholders agreeing to a merger of equals. A new entity has plenty of revenue upside from growth in Canadian cannabis sales from retail store growth, expected German medical sales growth and the entry of Aurora Cannabis into the U.S. CBD market.
Analyst Commentary
In a recent research note, CIBC analyst John Zamparo discussed the aspects of the potential merger and its implications on the cannabis sector:
"Such an arrangement would create a clear industry leader, with national market share likely above 30%. We believe anti-trust concerns would likely be non-existent, as consumers can choose from dozens of different brands, and neither company has a retail component," the analyst wrote. "Generally speaking, we believe the industry requires consolidation and also some dissolution. For a domestic industry with just $2.2B of retail sales, we believe it is difficult to justify the ~$17B in combined enterprise value. It may take time for this to play out, however."
To this end, Zamparo rates Aurora shares a Hold. But the analyst might as well have said “buy” — because he thinks the stock, currently at C$14.50, could zoom ahead to C$24 within a year, delivering 65% profits to new investors. (To watch Zamparo's track record, click here)
Takeaway
The key investor takeaway is that Aurora Cannabis was already a more appealing stock with the improving financials from cutting SG&A costs. A merger of equals with Aphria or any synergistic partner in the Canadian space would make the stock far more appealing as reduced competition improves the profit profile in the sector.
To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclosure: No position.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | A recent merger discussion between two of the three leading Canadian cannabis companies could provide substantial synergies and plenty of upside to the shareholders of Aurora Cannabis (ACB) and Aphria (APHA). The suggested C$200 million in synergies and the appointment of Aphria CEO Irwin Simon would place the combined entity in a very enviable position. We believe anti-trust concerns would likely be non-existent, as consumers can choose from dozens of different brands, and neither company has a retail component," the analyst wrote. | A recent merger discussion between two of the three leading Canadian cannabis companies could provide substantial synergies and plenty of upside to the shareholders of Aurora Cannabis (ACB) and Aphria (APHA). While Aurora Cannabis and Aphria reported mostly Canadian cannabis sales in the last quarter with Aurora at C$70 million and Aphria at C$57 million, Aphria does have a large German medical distribution business not generally included in valuation discussions due to the low value and growth potential of the business. Aphria has targeted EBITDA profits of C$40 million for the fiscal year ended in May while Aurora Cannabis recently cut SG&A costs to below C$45 million quarterly and plans EBITDA profits in the current quarter. | A recent merger discussion between two of the three leading Canadian cannabis companies could provide substantial synergies and plenty of upside to the shareholders of Aurora Cannabis (ACB) and Aphria (APHA). These stocks only trail the behemoth Canopy Growth in total sales for Canadian cannabis companies, but the later obtains substantial sales outside the Canadian cannabis market. While Aurora Cannabis and Aphria reported mostly Canadian cannabis sales in the last quarter with Aurora at C$70 million and Aphria at C$57 million, Aphria does have a large German medical distribution business not generally included in valuation discussions due to the low value and growth potential of the business. | A recent merger discussion between two of the three leading Canadian cannabis companies could provide substantial synergies and plenty of upside to the shareholders of Aurora Cannabis (ACB) and Aphria (APHA). A deal might not happen between these two companies, but the consolidation in the cannabis sector will ultimately help Aurora Cannabis. The suggested C$200 million in synergies and the appointment of Aphria CEO Irwin Simon would place the combined entity in a very enviable position. |
37355.0 | 2020-07-23 00:00:00 UTC | 3 Reasons Canadian Pot Stocks Could Crush Earnings Expectations in Q2 | ACB | https://www.nasdaq.com/articles/3-reasons-canadian-pot-stocks-could-crush-earnings-expectations-in-q2-2020-07-23 | nan | nan | For more than a year, cannabis stocks have been a monumental disappointment. Though the industry still offers incredible long-term growth potential, all next-big-thing investments face growing pains, and the pot industry is currently working its way through that phase as we speak.
It's been especially troublesome for marijuana stocks north of the border. Canada became the first industrialized country in the modern era to give recreational cannabis a green light in October 2018. This should have put Canada on track to be a global marijuana leader. But it blew its opportunity, no thanks to Health Canada and provincial regulators.
But there may be a bit of a bright side in the upcoming earnings season for Canadian pot stocks. With Wall Street's expectations for the industry depressed, most, if not all, Canadian licensed producers (LPs) should handily surpass sales and "profit" expectations. I say "profit" in quotation marks because all Canadian marijuana stocks are expected to lose money on an operating basis in the calendar second quarter.
Below are three reasons Canadian marijuana stocks can surprise in Q2.
Image source: Getty Images.
More dispensaries have opened across the country
The first substantive catalyst for Canadian pot stocks is that we've seen a surge in the numbers of dispensaries opening for business is key markets. As reported by BNN Bloomberg late last week, Canada, as a whole, has surpassed 1,000 open retail locations, albeit more than 500 are located in Alberta.
The inability of provincial regulators to quickly and efficiently assign dispensary licenses meant far too few retail locations have opened in more densely populated provinces, like Ontario and British Columbia. In many instances, this led has led to rising inventory levels for LPs and supply chain bottlenecks.
However, the second quarter saw Ontario surpass its 100th open retail store. For context, just two dozen dispensaries were open on the one-year anniversary of adult-use weed begin legalized (Oct. 17, 2019). This long-awaited uptick is tied to Ontario retiring its lottery system for assigning retail store licenses on Dec. 31, 2019, and the implementation of a more traditional application and vetting process.
Since Aurora Cannabis (NYSE: ACB) has consistently been outproducing its peers, in terms of kilograms, this significant increase in licensed dispensaries in Ontario likely benefits it most. Both Aurora and Canopy Growth (NYSE: CGC) have relatively high levels of inventory, and these new retail locations may provide an avenue to avoid writedowns.
Image source: Getty Images.
A COVID-19 lockdown demand spike
Secondly, the coronavirus disease 2019 (COVID-19) pandemic could prove to be more a benefit than a detriment to the Canadian marijuana industry.
Months ago, as lockdowns were becoming a reality across much of the developed world, I'd opined that the cannabis industry would be hurt in a number of ways. This included a decline in tourism-fueled sales, supply chain disruptions (e.g., most vape pens are manufactured in China), and the likelihood that consumers would rein in spending given economic uncertainty and the inability to touch, feel, and smell in-store product.
However, this prognostication may be all wet. You see, cannabis store sales, as reported by Statistics Canada, surged close to 20% in both March and April from where they were in February. This would suggest that consumers stocked up on cannabis products prior to and during Canadian lockdown due to COVID-19.
What remains to be seen is if this uptick in sales was sustained throughout the entirety of the second quarter. Having more open dispensaries should certainly have helped. But given that Statistics Canada's data lags by more than 2.5 months when reported, we'll probably know this answer when pot stocks begin unveiling their operating results in the next couple of weeks. Nonetheless, Canadian weed stocks had at least a one-month head start in higher sales figures during Q2.
Image source: Getty Images.
Aggressive cost-cutting by LPs
Third and finally, aggressive cost-reduction efforts put in place by LPs should give Canadian pot stocks a chance to leapfrog Wall Street's per-share loss estimates.
Aurora Cannabis recently announced that its selling, general and administrative costs should come in between $40 million Canadian and CA$45 million on a quarterly basis, down from close to CA$100 million just two quarters ago. Aurora has halted construction on two of its largest projects, and it sold its 1-million-square-foot Exeter facility during the second quarter.
Likewise, Canopy Growth's new CEO David Klein has been tightening his company's belt. Canopy has closed two British Columbia-based greenhouses totaling 3 million square feet of licensed production space and declined to open the company's Niagara on the Lake facility. Further, Canopy Growth has trimmed its staff on multiple occasions and significantly reduced its share-based compensation.
Even HEXO (NYSE: HEXO) has gotten in on the cost-cutting act. HEXO announced the permanent closure of the Niagara facility, acquired during the 2019 Newstrike Brands buyout, then recently sold the Niagara grow farm for CA$10.25 million. Similar to Aurora, Canopy Growth, and virtually all Canadian LPs, HEXO has trimmed its workforce to bring expenditures more in line with near-term sales expectations.
To be clear, I'm talking about a "less bad" scenario in Q2 for Canadian pot stocks, which isn't to be confused with the group having a "good" quarter. Nevertheless, it should be a step in the right direction.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Since Aurora Cannabis (NYSE: ACB) has consistently been outproducing its peers, in terms of kilograms, this significant increase in licensed dispensaries in Ontario likely benefits it most. The inability of provincial regulators to quickly and efficiently assign dispensary licenses meant far too few retail locations have opened in more densely populated provinces, like Ontario and British Columbia. This included a decline in tourism-fueled sales, supply chain disruptions (e.g., most vape pens are manufactured in China), and the likelihood that consumers would rein in spending given economic uncertainty and the inability to touch, feel, and smell in-store product. | Since Aurora Cannabis (NYSE: ACB) has consistently been outproducing its peers, in terms of kilograms, this significant increase in licensed dispensaries in Ontario likely benefits it most. You see, cannabis store sales, as reported by Statistics Canada, surged close to 20% in both March and April from where they were in February. Aggressive cost-cutting by LPs Third and finally, aggressive cost-reduction efforts put in place by LPs should give Canadian pot stocks a chance to leapfrog Wall Street's per-share loss estimates. | Since Aurora Cannabis (NYSE: ACB) has consistently been outproducing its peers, in terms of kilograms, this significant increase in licensed dispensaries in Ontario likely benefits it most. More dispensaries have opened across the country The first substantive catalyst for Canadian pot stocks is that we've seen a surge in the numbers of dispensaries opening for business is key markets. Aurora Cannabis recently announced that its selling, general and administrative costs should come in between $40 million Canadian and CA$45 million on a quarterly basis, down from close to CA$100 million just two quarters ago. | Since Aurora Cannabis (NYSE: ACB) has consistently been outproducing its peers, in terms of kilograms, this significant increase in licensed dispensaries in Ontario likely benefits it most. The inability of provincial regulators to quickly and efficiently assign dispensary licenses meant far too few retail locations have opened in more densely populated provinces, like Ontario and British Columbia. However, the second quarter saw Ontario surpass its 100th open retail store. |
37356.0 | 2020-07-22 00:00:00 UTC | TSX rises 0.05% to 16,171.06 | ACB | https://www.nasdaq.com/articles/tsx-rises-0.05-to-16171.06-2020-07-22 | nan | nan | * The Toronto Stock Exchange's TSX rises 0.05 percent to 16,171.06
* Leading the index were Aurinia Pharmaceuticals Inc , up 14.1%, First Majestic Silver Corp FR.TO, up 13.5%, and Ritchie Bros. Auctioneers Inc RBA.TO, higher by 5.1%.
* Lagging shares were Cascades Inc CAS.TO, down 5.4%, Aurora Cannabis Inc ACB.TO, down 4.5%, and Pason Systems Inc PSI.TO, lower by 4.1%.
* On the TSX 116 issues rose and 101 fell as a 1.1-to-1 ratio favored advancers. There were 19 new highs and no new lows, with total volume of 185.8 million shares.
* The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Enbridge Inc ENB.TO and Suncor Energy Inc SU.TO.
* The TSX's energy group .SPTTEN fell 1.08 points, or 1.3%, while the financials sector .SPTTFS slipped 0.85 points, or 0.3%.
* West Texas Intermediate crude futures CLc1 fell 0.07%, or $0.03, to $41.89 a barrel. Brent crude LCOc1 fell 0.05%, or $0.02, to $44.3 O/R
* The TSX is off 5.2% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Cascades Inc CAS.TO, down 5.4%, Aurora Cannabis Inc ACB.TO, down 4.5%, and Pason Systems Inc PSI.TO, lower by 4.1%. * The Toronto Stock Exchange's TSX rises 0.05 percent to 16,171.06 * Leading the index were Aurinia Pharmaceuticals Inc , up 14.1%, First Majestic Silver Corp FR.TO, up 13.5%, and Ritchie Bros. Auctioneers Inc RBA.TO, higher by 5.1%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Enbridge Inc ENB.TO and Suncor Energy Inc SU.TO. | * Lagging shares were Cascades Inc CAS.TO, down 5.4%, Aurora Cannabis Inc ACB.TO, down 4.5%, and Pason Systems Inc PSI.TO, lower by 4.1%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Enbridge Inc ENB.TO and Suncor Energy Inc SU.TO. * The TSX's energy group .SPTTEN fell 1.08 points, or 1.3%, while the financials sector .SPTTFS slipped 0.85 points, or 0.3%. | * Lagging shares were Cascades Inc CAS.TO, down 5.4%, Aurora Cannabis Inc ACB.TO, down 4.5%, and Pason Systems Inc PSI.TO, lower by 4.1%. * The Toronto Stock Exchange's TSX rises 0.05 percent to 16,171.06 * Leading the index were Aurinia Pharmaceuticals Inc , up 14.1%, First Majestic Silver Corp FR.TO, up 13.5%, and Ritchie Bros. Auctioneers Inc RBA.TO, higher by 5.1%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Enbridge Inc ENB.TO and Suncor Energy Inc SU.TO. | * Lagging shares were Cascades Inc CAS.TO, down 5.4%, Aurora Cannabis Inc ACB.TO, down 4.5%, and Pason Systems Inc PSI.TO, lower by 4.1%. * The Toronto Stock Exchange's TSX rises 0.05 percent to 16,171.06 * Leading the index were Aurinia Pharmaceuticals Inc , up 14.1%, First Majestic Silver Corp FR.TO, up 13.5%, and Ritchie Bros. Auctioneers Inc RBA.TO, higher by 5.1%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Enbridge Inc ENB.TO and Suncor Energy Inc SU.TO. |
37357.0 | 2020-07-21 00:00:00 UTC | In Latest Wave of Marijuana Layoffs, Aurora Cannabis to Close Some European Offices | ACB | https://www.nasdaq.com/articles/in-latest-wave-of-marijuana-layoffs-aurora-cannabis-to-close-some-european-offices-2020-07 | nan | nan | Aurora Cannabis (NYSE: ACB) is closing several of its offices abroad and launching a new round of layoffs. The company confirmed a report from BNN Bloomberg that was published on Monday (and sourced from an internal memo the media outlet had seen) that it plans to shutter its offices in Spain, Portugal, and Italy.
Meanwhile, it will reduce headcount by around one-fourth in certain other European countries and at its regional office. It is unclear which specific country offices will be affected.
Image source: Getty Images.
"Like the Canadian recreational market, several European medical markets that Aurora currently has [a] presence in have not developed as quickly as we once anticipated," the company wrote in the memo.
"We must reduce operating costs and focus on immediate revenue opportunities in key markets," it added.
The company's forays abroad have not resulted in meaningful business. In Aurora's third quarter, the company's international sales came in at $4 million, forming a very small part of its $75.5 million in overall net revenue for the period. Marijuana legalization is proceeding slowly, if at all, in many markets overseas.
The company has already made a raft of job cuts so far this year. Last month, it announced it was laying off roughly 700 people and closing five production facilities.
Like many companies in the marijuana industry, Aurora is facing multiple difficulties in its business. These include regulatory delays, persistent competition from black-market product, and costs that drive its bottom line into the red.
On Tuesday Aurora's shares rose by 0.6%, exceeding the gains of the top equity indexes.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) is closing several of its offices abroad and launching a new round of layoffs. The company confirmed a report from BNN Bloomberg that was published on Monday (and sourced from an internal memo the media outlet had seen) that it plans to shutter its offices in Spain, Portugal, and Italy. These include regulatory delays, persistent competition from black-market product, and costs that drive its bottom line into the red. | Aurora Cannabis (NYSE: ACB) is closing several of its offices abroad and launching a new round of layoffs. "Like the Canadian recreational market, several European medical markets that Aurora currently has [a] presence in have not developed as quickly as we once anticipated," the company wrote in the memo. Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Aurora Cannabis (NYSE: ACB) is closing several of its offices abroad and launching a new round of layoffs. "Like the Canadian recreational market, several European medical markets that Aurora currently has [a] presence in have not developed as quickly as we once anticipated," the company wrote in the memo. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | Aurora Cannabis (NYSE: ACB) is closing several of its offices abroad and launching a new round of layoffs. Meanwhile, it will reduce headcount by around one-fourth in certain other European countries and at its regional office. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. |
37358.0 | 2020-07-20 00:00:00 UTC | Robinhood Investors Love This Marijuana Stock. Here's Why You Should Avoid It at All Costs | ACB | https://www.nasdaq.com/articles/robinhood-investors-love-this-marijuana-stock.-heres-why-you-should-avoid-it-at-all-costs | nan | nan | As of Friday, cannabis producer Aurora Cannabis (NYSE: ACB) was the 11th most widely held stock among Robinhood users. More than 447,000 investors held it in their portfolios on the platform.
The stock's performance, however, has not reflected that popularity. A modest $10,000 investment made one year ago in Aurora Cannabis would at the end of last week have been worth just $1,336 -- an 87% decline.
By contrast, if an investor had put that $10,000 into an index fund tracking the S&P 500 (and held on patiently through all the market's oscillations), their investment would have grown to $10,850.
Let's explore why I think investors would be smart to avoid shares of Aurora Cannabis now.
Image Source: Getty Images.
Big cash burn, and not much cash to burn
As of the end of its fiscal third quarter on March 31, Aurora Cannabis had approximately $230 million Canadian dollars in cash and CA$12 million in marketable securities. That's not a lot of liquidity considering it also has CA$293 million in long-term convertible debt and CA$246 million in long-term loans. Add in its CA$32 million in short-term convertible debt and CA$22 million in short-term loans, and that's a total of about CA$593 million in debt.
Meanwhile, Aurora Cannabis is still not profitable. In its fiscal Q3, it recognized CA$75 million in revenue, but more than CA$83 million in corporate expenses and nearly CA$64 million in impairments. In the first nine months of its fiscal year, Aurora Cannabis brought in CA$207 million in revenue, but recorded a net loss of CA$1.4 billion, which is a huge acceleration in losses compared to the prior year.
Production facility closures will slow it down
As a part of its second round of restructuring measures, Aurora Cannabis has cut 25% of its sales, general, and administrative staff, and plans to lay off 30% of its production staff by the end of calendar 2020. A total of 700 employees will be let go from Aurora Cannabis. That's a lot for a company that had just 2,779 employees last year.
Moreover, Aurora Cannabis is shutting down five production facilities across Canada, and will be taking a CA$140 million impairment to its inventory. Considering its inventory only amounted to CA$251 million in its fiscal Q3, these restructuring efforts signal that things have gone terribly wrong with its growth plans.
Indeed, while the company boasted an annual cannabis production capacity of 150,000 kg last year and had a projected production capacity of 500,000 kg this year, its near-term future looks far less optimistic. In fiscal Q3, Aurora Cannabis harvested just 36,000 kg of marijuana (144,000 kg annualized). Even worse, it sold just 13,000 kg of marijuana during the quarter (52,000 kg annualized). That's about a tenth of what the company estimated in terms of demand for cannabis in Canada.
Goodbye, goodwill
Unfortunately, the problems Aurora Cannabis faces only look worse due to its goodwill issues. Goodwill is an intangible asset -- the value of a company's brand, its unique technology and intellectual property, and its relationships with customers and employees, among other tough-to-measure, but vital, parts of a business. Those intangibles largely account for the premium a buyer will pay above book value when acquiring a target company -- and Aurora has been a buyer.
The value is treated as a non-cash item and must be written down as an impairment if the acquired company's underlying business underperforms.
In its most recently reported quarter, Aurora Cannabis had more than CA$2.4 billion of goodwill on its balance sheet, accounting for more than half of its CA$4.7 billion value. In the first round of restructuring, it wrote off nearly CA$1 billion in goodwill -- in essence recognizing that it had overpaid for many of the assets it acquired. Goodwill now accounts for a majority of its CA$3.9 billion in shareholder equity, and may require further write-downs.
The bottom line
At the end of the day, Aurora Cannabis is not a shareholder-friendly company. Due to its significant goodwill impairments, production woes, and heavy debt burden, Aurora has had to keep raising cash via stock offerings to make up for its losses. Since 2016, the number of shares of Aurora Cannabis outstanding has grown from 10 million to over 100 million.
For all of these reasons, I think there are much better options for investors in the cannabis industry. There's no reason to risk buying into a company that has already diluted its shareholders by a factor of 10 over the past four years to compensate for its operational woes.
10 stocks we like better than Aurora Cannabis Inc.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | As of Friday, cannabis producer Aurora Cannabis (NYSE: ACB) was the 11th most widely held stock among Robinhood users. Considering its inventory only amounted to CA$251 million in its fiscal Q3, these restructuring efforts signal that things have gone terribly wrong with its growth plans. Goodwill is an intangible asset -- the value of a company's brand, its unique technology and intellectual property, and its relationships with customers and employees, among other tough-to-measure, but vital, parts of a business. | As of Friday, cannabis producer Aurora Cannabis (NYSE: ACB) was the 11th most widely held stock among Robinhood users. Big cash burn, and not much cash to burn As of the end of its fiscal third quarter on March 31, Aurora Cannabis had approximately $230 million Canadian dollars in cash and CA$12 million in marketable securities. That's not a lot of liquidity considering it also has CA$293 million in long-term convertible debt and CA$246 million in long-term loans. | As of Friday, cannabis producer Aurora Cannabis (NYSE: ACB) was the 11th most widely held stock among Robinhood users. Big cash burn, and not much cash to burn As of the end of its fiscal third quarter on March 31, Aurora Cannabis had approximately $230 million Canadian dollars in cash and CA$12 million in marketable securities. In its fiscal Q3, it recognized CA$75 million in revenue, but more than CA$83 million in corporate expenses and nearly CA$64 million in impairments. | As of Friday, cannabis producer Aurora Cannabis (NYSE: ACB) was the 11th most widely held stock among Robinhood users. That's a lot for a company that had just 2,779 employees last year. Moreover, Aurora Cannabis is shutting down five production facilities across Canada, and will be taking a CA$140 million impairment to its inventory. |
37359.0 | 2020-07-19 00:00:00 UTC | 3 Top Robinhood Stocks That Investors Should Rethink | ACB | https://www.nasdaq.com/articles/3-top-robinhood-stocks-that-investors-should-rethink-2020-07-19 | nan | nan | The Robinhood trading app has stoked the interest of young investors. Although these traders have found some potentially lucrative stocks, some of those stocks could become potential investor pitfalls. To this end, knowing when to sell shares will become a critical skill if these investors are to succeed.
Part of determining the right time to sell involves recognizing financial or business conditions that make staying in a stock untenable. Unfortunately, many of the most popular stocks on Robinhood face such issues. Given those challenges, Robinhood investors may want to re-evaluate their holdings in Aurora Cannabis (NYSE: ACB), Fitbit (NYSE: FIT), and Ford Motor Company (NYSE: F).
1. Aurora Cannabis
During the marijuana stock bubble in 2017 and 2018, Aurora Cannabis had become one of the largest producers of marijuana. However, once interest in pot stocks waned, Aurora's production abilities became a huge disadvantage as the market experienced a massive oversupply. This sent Aurora stock below $1 per share, forcing the company to institute a 1-for-12 reverse stock split.
ACB data by YCharts
The company has since suspended construction on two large production facilities and closed five of its smaller production facilities. It also sold its massive Exeter greenhouse for one-third of its purchase price.
These sales were not enough to clean up the company's finances. In its third quarter, Aurora Cannabis reported a loss of CA$1.37 ($1.01) per share. Analysts expect a total loss of CA$13.62 ($10.03) per share for the year, with the cash burn continuing into fiscal 2021. Investors should expect more stock dilution and asset sales as the company struggles to stay in existence. Neither of these actions is likely to boost its stock price.
Image source: Getty Images
2. Fitbit
Fitbit is a well-known name facing deep uncertainty. Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is currently attempting to buy out the company, but the merger is facing issues with regulators in Europe. Alphabet has offered to not use health data for targeted ads. Whether that can help the Google parent win approval from the EU remains unclear.
Unfortunately, this makes Fitbit stock a bet on whether the deal happens. Alphabet offered to pay $7.35 per share for the company, which currently trades in the $6.90 per-share range. A completed deal earns current investors an increase of about 6.5%.
FIT data by YCharts
However, prospects appear dire for Fitbit shareholders if the deal does not occur. Fitbit stock could easily see a rapid decline to the sub-$5-per-share level it saw before the company announced the deal.
It may fall much further from there. Fitbit will have to compete with Alphabet's Android and Apple's iOS ecosystems under such a scenario. As Fitbit is a company struggling to turn a profit, investors could see their stake wiped out if that occurred. Robinhood traders should consider all of these possibilities before deciding to stay in Fitbit stock.
3. Ford Motor Company
Interestingly, Ford stock has become the most popular ticker on the Robinhood app. Perhaps the single-digit nominal price or its bet on electric vehicles (EVs) attracts these investors.
Nonetheless, if investors took a careful look at the company's financials, they might reconsider. This year, investors have had to endure last quarter's net loss of $2 billion due to the production shutdowns brought about by the coronavirus pandemic. Investors also suffered a dividend suspension that cost them their $0.60 per-share annual payout.
This is on top of a stock decline exceeding 60% over the last year. Although Ford stock has recovered much of its lost value, it trades at about a 35% discount to its 52-week high.
F data by YCharts
However, the problems do not end there. The company faces more than $100 billion in long-term debt as well as pension liabilities of $11.1 billion.
Admittedly, Ford's prospects looked promising amid these debt and pension concerns until recently. A high dividend, improving China sales, and an upcoming move into EVs gave the company a rosy outlook.
Still, the stock price actually declined during that time. Hence, even if conditions improve for Ford, it could easily not translate into gains for Ford stockholders.
10 stocks we like better than Ford
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Ford wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Fitbit. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Given those challenges, Robinhood investors may want to re-evaluate their holdings in Aurora Cannabis (NYSE: ACB), Fitbit (NYSE: FIT), and Ford Motor Company (NYSE: F). ACB data by YCharts The company has since suspended construction on two large production facilities and closed five of its smaller production facilities. Part of determining the right time to sell involves recognizing financial or business conditions that make staying in a stock untenable. | Given those challenges, Robinhood investors may want to re-evaluate their holdings in Aurora Cannabis (NYSE: ACB), Fitbit (NYSE: FIT), and Ford Motor Company (NYSE: F). ACB data by YCharts The company has since suspended construction on two large production facilities and closed five of its smaller production facilities. Ford Motor Company Interestingly, Ford stock has become the most popular ticker on the Robinhood app. | Given those challenges, Robinhood investors may want to re-evaluate their holdings in Aurora Cannabis (NYSE: ACB), Fitbit (NYSE: FIT), and Ford Motor Company (NYSE: F). ACB data by YCharts The company has since suspended construction on two large production facilities and closed five of its smaller production facilities. Although these traders have found some potentially lucrative stocks, some of those stocks could become potential investor pitfalls. | Given those challenges, Robinhood investors may want to re-evaluate their holdings in Aurora Cannabis (NYSE: ACB), Fitbit (NYSE: FIT), and Ford Motor Company (NYSE: F). ACB data by YCharts The company has since suspended construction on two large production facilities and closed five of its smaller production facilities. Alphabet offered to pay $7.35 per share for the company, which currently trades in the $6.90 per-share range. |
37360.0 | 2020-07-17 00:00:00 UTC | Momentum in Canopy Growth Stock Could Send Shares to $22 | ACB | https://www.nasdaq.com/articles/momentum-in-canopy-growth-stock-could-send-shares-to-%2422-2020-07-17 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Can Canopy Growth (NYSE:CGC) break out over resistance? That’s what investors want to know now that Canopy Growth stock, Aphria (NYSE:APHA), and others cannabis stocks are beginning to find some upside momentum.
Source: Shutterstock
If this group can get buyers to return, then we could see some powerful moves across the board.
Cannabis and Coronavirus
The novel coronavirus caused a painful spill in the equity markets. However, many names have come roaring back to life. In some instances, like with the Nasdaq, these investments have gone on to hit new highs.
Cannabis stocks were starting to look better in the first quarter of 2020. That was after bottoming in Q4 and showing signs of moving higher. In any regard, cannabis stocks understandably sold off.
Many of these names have inferior balance sheets — thankfully CGC stock isn’t one of them — and have decelerating growth. In this case, names like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) have struggled immensely.
15 Growth Stocks That Are Being Propped Up By Low Rates
Click to Enlarge
That’s even as some research suggests that cannabis sales held up fine during the coronavirus outbreak. In fact, some reports show that lockdown orders helped to accelerate cannabis sales. But that’s not the narrative.
Instead, shares declined in the coronavirus selloff as investors didn’t want to own stocks with shaky financials. Further, any cannabis legislation that was sitting on a governor or government official’s desk was pushed aside for Covid-19. Eventually these legislations will be addressed, but a delay is not a positive catalyst in the short-term.
Canopy Growth Stock Has Staying Power
On the plus side, Canopy Growth isn’t one of those stocks with shoddy financials.
The company boasts $2.56 billion in current assets and $6.8 billion in total assets. Those sums dominate current and total liabilities, which come in at just $420.5 million and $1.75 billion, respectively.
Admittedly, Canopy Growth is not profitable or free cash flow positive yet. So continuing operations will further erode its balance sheet over time. But that is true for virtually all of the industry at this point. In the case of CGC stock, its assets are large enough to buoy its business in the meantime.
It helps that it has Constellation Brands (NYSE:STZ) as its largest holder. At some point, the company could become the majority shareholder and that has helped to keep Canopy’s bank accounts adequately supplied. The company recently exercised its warrants to bring its total stake in Canopy up to 38.6%.
Bottom Line on Canopy Growth
Click to Enlarge
Source: Chart courtesy of TradingView
I like Canopy Growth, even though the industry has had trouble gaining some traction. This is the leading stock in this group, and when the sector catches some momentum, so too with CGC stock.
Canopy is making moves into the U.S., first sinking into the CBD market to drive U.S. sales. It will also be in position for if (and more likely when) cannabis becomes legal at the federal level.
The company has also shuffled up its management team, which should help turn the page to a more optimistic future. Obviously the coronavirus will come with its own headaches, but by and large, cannabis is being more widely accepted and that is a positive for the group over the long-term.
On the charts, CGC stock is starting to rotate over the $18.30 area. It’s also putting in a series of higher lows and maintaining over the 20-day and 50-day moving averages. If shares can clear this area and the 200-day moving average, the May highs near $22 could be in play.
What if shares don’t gain enough momentum to break out? In that case, technical traders will want to keep an eye on the $16.50 level. That’s where uptrend support (blue line) comes into play. However, if this level is lost, it also means that the 20-day and 50-day moving averages failed in supporting the stock.
That could put the July and June lows in play, at $15.57 and $15.32, respectively.
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The post Momentum in Canopy Growth Stock Could Send Shares to $22 appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In this case, names like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) have struggled immensely. Click to Enlarge Source: Chart courtesy of TradingView I like Canopy Growth, even though the industry has had trouble gaining some traction. Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. | In this case, names like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) have struggled immensely. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Can Canopy Growth (NYSE:CGC) break out over resistance? Many of these names have inferior balance sheets — thankfully CGC stock isn’t one of them — and have decelerating growth. | In this case, names like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) have struggled immensely. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Can Canopy Growth (NYSE:CGC) break out over resistance? That’s what investors want to know now that Canopy Growth stock, Aphria (NYSE:APHA), and others cannabis stocks are beginning to find some upside momentum. | In this case, names like Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB) have struggled immensely. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Can Canopy Growth (NYSE:CGC) break out over resistance? Canopy Growth Stock Has Staying Power On the plus side, Canopy Growth isn’t one of those stocks with shoddy financials. |
37361.0 | 2020-07-17 00:00:00 UTC | An Aurora Cannabis-Aphria Merger Would Be a Bad Idea | ACB | https://www.nasdaq.com/articles/an-aurora-cannabis-aphria-merger-would-be-a-bad-idea-2020-07-17 | nan | nan | If you think the stock market has had a wild year, take a peek at cannabis stocks, which over the past three years have skyrocketed and imploded.
Back in 2017 and 2018, you could have been blindfolded and chosen a pot stock from a list of publicly traded companies and landed yourself a winner. Prior to the legalization of adult-use weed in Canada on Oct. 17, 2018, promises of capacity expansion, international sales, and acquisitions were often more than enough to send marijuana stock valuations into the stratosphere.
However, that's not been the case since the end of March 2019. The vast majority of pot stocks have seen their valuations decline by 50% (or more) as supply issues in Canada, high tax rates in the U.S., and financing concerns throughout North America, have burst the industry's bubble. All next-big-thing investments undergo growing pains, and the cannabis industry is working its way through a rough patch of its own at the moment.
Image source: Getty Images.
The Canadian cannabis industry was apparently on the verge of a megamerger
With a number of well-known cannabis stocks struggling, the expectation from Wall Street has been that bankruptcies or mergers would thin out the field a bit and allow the survivors to thrive. Little did investors know that, according to BNNBloomberg, a megamerger discussion was in the works to our north as recently as last week.
Based on reports from two people familiar with the matter, Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) were engaged in merger discussions whereby Aphria shareholders would own 51% of the new entity, with Aurora Cannabis' shareholders making up the remaining 49%. The combined company would have a market cap of close to $3 billion, control around 30% of Canada's legal cannabis sales, and have the potential to generate 800 million Canadian dollars ($592.3 million U.S.) in yearly sales.
Additionally, the combined company would have a production, import/export, or research presence in 25 total countries, with the potential to save in the neighborhood of CA$200 million annually in cost synergies. These overseas markets are viewed as critical to the success of Canadian licensed producers since the ability to export can ensure that oversupply and declining domestic prices don't become a drag on margins.
Although neither company would comment on whether they'd entered into discussions about merging their operations, BNNBloomberg noted that disagreements ultimately arose over the makeup of the board of directors and compensation for senior executives. While future negotiations are possible, it would appear that both companies are going it alone for now.
Image source: Getty Images.
An Aurora Cannabis-Aphria tie-up would have been a terrible idea
If you ask me, it's probably a good thing that negotiations fell apart. Putting aside the almost laughable fact that this deal may have fallen apart because of disagreements on senior executive compensation -- over the trailing two-year period, Aphria's and Aurora's stock are down 43% and 84%, respectively -- a combination of these two businesses really wouldn't make a lot of sense.
For instance, the report suggests that the combined entity would recognize around CA$200 million in cost synergies. Much of this would likely be realized by closing smaller production facilities and relying on economies of scale in larger grow farms. But Aurora Cannabis is already doing this.
It's shuttered five of its smaller facilities, halted construction on two major projects, and sold a 1 million-square-foot greenhouse. Combining these two businesses would just create a company with far too much production for what's demanded today, ultimately forcing the new entity to shutter more facilities.
Another head-scratcher is that the deal would emphasize their global appeal. The thing is, Aurora Cannabis already has a presence in two dozen countries outside of Canada, and Aphria has a presence in nearly one dozen of these same markets. Neither company has been generating much in the way of marijuana sales outside of Canada. Thus, I fail to see how combining two companies with similar struggling international operations would make for a successful overseas segment.
The combination doesn't seem to make a lot of sense for Aurora Cannabis from an operating margin standpoint because Aphria is generating a lot of its revenue at the moment from its pharmaceutical distribution business (CC Pharma) in Germany. Pharmaceutical distribution can lead to a lot of sales and somewhat predictable cash flow, but it's a very low-margin operating segment. Therefore, putting Aurora and Aphria together would probably reduce margins, not expand them.
Image source: Getty Images.
Don't even get me started on how ugly the combined balance sheet of these two companies would be. Aurora Cannabis is lugging around CA$2.42 billion in goodwill, most of which is tied to grossly overpaying for MedReleaf in July 2018. Meanwhile, Aphria had almost CA$670 million in goodwill on its balance sheet, which is primarily from its purchase of Nuuvera in March 2018.
This combined company would have almost CA$3.1 billion in goodwill and roughly CA$845 million in intangible assets. Not even taking into account the strong likelihood of impairment charges tied to facility closures and layoffs, it would be a massive writedown waiting to happen.
Aurora Cannabis and Aphria have a lot of work to do to rebuild shareholder trust and get production in line with current demand. Until these basic goals are tackled, the idea of combining these two companies should be off the table.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Based on reports from two people familiar with the matter, Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) were engaged in merger discussions whereby Aphria shareholders would own 51% of the new entity, with Aurora Cannabis' shareholders making up the remaining 49%. The vast majority of pot stocks have seen their valuations decline by 50% (or more) as supply issues in Canada, high tax rates in the U.S., and financing concerns throughout North America, have burst the industry's bubble. These overseas markets are viewed as critical to the success of Canadian licensed producers since the ability to export can ensure that oversupply and declining domestic prices don't become a drag on margins. | Based on reports from two people familiar with the matter, Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) were engaged in merger discussions whereby Aphria shareholders would own 51% of the new entity, with Aurora Cannabis' shareholders making up the remaining 49%. The combined company would have a market cap of close to $3 billion, control around 30% of Canada's legal cannabis sales, and have the potential to generate 800 million Canadian dollars ($592.3 million U.S.) in yearly sales. Thus, I fail to see how combining two companies with similar struggling international operations would make for a successful overseas segment. | Based on reports from two people familiar with the matter, Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) were engaged in merger discussions whereby Aphria shareholders would own 51% of the new entity, with Aurora Cannabis' shareholders making up the remaining 49%. The combined company would have a market cap of close to $3 billion, control around 30% of Canada's legal cannabis sales, and have the potential to generate 800 million Canadian dollars ($592.3 million U.S.) in yearly sales. The combination doesn't seem to make a lot of sense for Aurora Cannabis from an operating margin standpoint because Aphria is generating a lot of its revenue at the moment from its pharmaceutical distribution business (CC Pharma) in Germany. | Based on reports from two people familiar with the matter, Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) were engaged in merger discussions whereby Aphria shareholders would own 51% of the new entity, with Aurora Cannabis' shareholders making up the remaining 49%. But Aurora Cannabis is already doing this. Meanwhile, Aphria had almost CA$670 million in goodwill on its balance sheet, which is primarily from its purchase of Nuuvera in March 2018. |
37362.0 | 2020-07-17 00:00:00 UTC | Canopy Growth Confirms a New Round of Layoffs | ACB | https://www.nasdaq.com/articles/canopy-growth-confirms-a-new-round-of-layoffs-2020-07-17 | nan | nan | Adding to a worrying trend in the cannabis industry, Canopy Growth (NYSE: CGC) has enacted a new round of employee layoffs. The company confirmed to Bloomberg Thursday that it had eliminated an unspecified number of positions. Like other businesses in the cannabis sector, which was struggling with myriad issues even before the coronavirus pandemic, Canopy Growth has been searching for ways to cut costs lately.
Over the past year, a great many of Canopy Growth's peers have laid off workers or announced plans to do so. Companies reaching for the pink slips included Aurora Cannabis, Tilray, and HEXO.
Image source: Getty Images.
Prior to this announcement, Canopy Growth had already cut roughly 800 employees as part of a wider effort to not only reduce expenditures, but to speed up its course down the road to profitability. Other elements in that strategy include a rationalization of its rather sprawling product assortment, and the introduction of budget-priced marijuana flower offering. It also remains optimistic about the future of cannabis derivative products, particularly drinks.
Investors don't seem to be sharing the bullish outlook, however, either for Canopy Growth particularly or the marijuana industry in general. Share prices of stocks in the sector have eroded over the past year -- at times, dramatically. This trend has been exacerbated by the coronavirus pandemic, despite the fact that cannabis dispensaries remained open during most of the broader economic closures in many states, where they were classified as "essential businesses."
The market is not high on Canopy Growth stock just now. On Friday, the shares were down nearly 1% in late afternoon trading, in contrast to the modest gains of the major equity indexes.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Like other businesses in the cannabis sector, which was struggling with myriad issues even before the coronavirus pandemic, Canopy Growth has been searching for ways to cut costs lately. Prior to this announcement, Canopy Growth had already cut roughly 800 employees as part of a wider effort to not only reduce expenditures, but to speed up its course down the road to profitability. This trend has been exacerbated by the coronavirus pandemic, despite the fact that cannabis dispensaries remained open during most of the broader economic closures in many states, where they were classified as "essential businesses." | Adding to a worrying trend in the cannabis industry, Canopy Growth (NYSE: CGC) has enacted a new round of employee layoffs. Like other businesses in the cannabis sector, which was struggling with myriad issues even before the coronavirus pandemic, Canopy Growth has been searching for ways to cut costs lately. Prior to this announcement, Canopy Growth had already cut roughly 800 employees as part of a wider effort to not only reduce expenditures, but to speed up its course down the road to profitability. | Like other businesses in the cannabis sector, which was struggling with myriad issues even before the coronavirus pandemic, Canopy Growth has been searching for ways to cut costs lately. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Over the past year, a great many of Canopy Growth's peers have laid off workers or announced plans to do so. This trend has been exacerbated by the coronavirus pandemic, despite the fact that cannabis dispensaries remained open during most of the broader economic closures in many states, where they were classified as "essential businesses." The Motley Fool recommends HEXO. |
37363.0 | 2020-07-16 00:00:00 UTC | TSX falls 0.24% to 16,024.50 | ACB | https://www.nasdaq.com/articles/tsx-falls-0.24-to-16024.50-2020-07-16 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.24 percent to 16,024.50
* Leading the index were Intertape Polymer Group Inc , up 5.1%, Cineplex Inc CGX.TO, up 3.8%, and Sleep Country Canada Holdings Inc ZZZ.TO, higher by 3.3%.
* Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.3%, Aurora Cannabis Inc ACB.TO, down 5.3%, and First Quantum Minerals Ltd FM.TO, lower by 4.0%.
* On the TSX 70 issues rose and 146 fell as a 0.5-to-1 ratio favored decliners. There were 9 new highs and no new lows, with total volume of 174.6 million shares.
* The most heavily traded shares by volume were Air Canada AC.TO, B2gold Corp BTO.TO and Algonquin Power & Utilities Corp AQN.TO.
* The TSX's energy group .SPTTEN fell 0.91 points, or 1.2%, while the financials sector .SPTTFS climbed 0.21 points, or 0.1%.
* West Texas Intermediate crude futures CLc1 fell 1.14%, or $0.47, to $40.73 a barrel. Brent crude LCOc1 fell 0.94%, or $0.41, to $43.38 O/R
* The TSX is off 6.1% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.3%, Aurora Cannabis Inc ACB.TO, down 5.3%, and First Quantum Minerals Ltd FM.TO, lower by 4.0%. * The Toronto Stock Exchange's TSX falls 0.24 percent to 16,024.50 * Leading the index were Intertape Polymer Group Inc , up 5.1%, Cineplex Inc CGX.TO, up 3.8%, and Sleep Country Canada Holdings Inc ZZZ.TO, higher by 3.3%. * On the TSX 70 issues rose and 146 fell as a 0.5-to-1 ratio favored decliners. | * Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.3%, Aurora Cannabis Inc ACB.TO, down 5.3%, and First Quantum Minerals Ltd FM.TO, lower by 4.0%. * The most heavily traded shares by volume were Air Canada AC.TO, B2gold Corp BTO.TO and Algonquin Power & Utilities Corp AQN.TO. * The TSX's energy group .SPTTEN fell 0.91 points, or 1.2%, while the financials sector .SPTTFS climbed 0.21 points, or 0.1%. | * Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.3%, Aurora Cannabis Inc ACB.TO, down 5.3%, and First Quantum Minerals Ltd FM.TO, lower by 4.0%. * The Toronto Stock Exchange's TSX falls 0.24 percent to 16,024.50 * Leading the index were Intertape Polymer Group Inc , up 5.1%, Cineplex Inc CGX.TO, up 3.8%, and Sleep Country Canada Holdings Inc ZZZ.TO, higher by 3.3%. * The most heavily traded shares by volume were Air Canada AC.TO, B2gold Corp BTO.TO and Algonquin Power & Utilities Corp AQN.TO. | * Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.3%, Aurora Cannabis Inc ACB.TO, down 5.3%, and First Quantum Minerals Ltd FM.TO, lower by 4.0%. * The Toronto Stock Exchange's TSX falls 0.24 percent to 16,024.50 * Leading the index were Intertape Polymer Group Inc , up 5.1%, Cineplex Inc CGX.TO, up 3.8%, and Sleep Country Canada Holdings Inc ZZZ.TO, higher by 3.3%. * On the TSX 70 issues rose and 146 fell as a 0.5-to-1 ratio favored decliners. |
37364.0 | 2020-07-16 00:00:00 UTC | 5 Cannabis Catalysts for the Remainder of 2020 | ACB | https://www.nasdaq.com/articles/5-cannabis-catalysts-for-the-remainder-of-2020-2020-07-16 | nan | nan | As any marijuana stock investor can tell you, the past 15 months haven't been pretty for pot stocks. Since April 2019, the vast majority of cannabis stocks have lost 50% or more of their value as growing pains have taken shape. In Canada, supply issues have led to everything from shortages to bottlenecks. Meanwhile, high tax rates on legal product in the U.S. have ensured that black market demand remains robust.
But in spite of these problems, the marijuana industry is slowly but surely finding its footing and maturing before our eyes. This isn't going to be an overnight process, but we're witnessing the initial stages of this shakeout and maturation taking place.
As we motor on through this unprecedented year, here are the five biggest cannabis catalysts you should have your eyes on for the remainder of 2020.
Image source: Getty Images.
1. The 2020 elections
One of the more intriguing questions to be answered this year is, what's going to happen on the marijuana front come November when Americans head to the polls? No matter who wins the presidency, there's a pretty good chance that legalizing cannabis is out of the question. However, state-level legalizations could provide ample opportunity for the U.S. pot industry.
Right now, we know that three states are, for certain, voting on a cannabis measure come November -- New Jersey, Mississippi, and South Dakota. South Dakota is of particular interest since it's the first state to vote on a separate medical marijuana and adult-use weed measure in the same election.
In my view, New Jersey is the likeliest of all states to give recreational pot the green light in 2020, but I wouldn't be surprised to see Arizona added to this list within the next couple of weeks. Among U.S. multistate operators (MSO), it could be a fantastic election for Curaleaf (OTC: CURLF). Curaleaf already leads publicly traded MSOs with 57 operational dispensaries, and should soon close on its acquisition of Grassroots, which'll lift ifs dispensary count even more. With an existing presence in New Jersey, the Garden State could help Curaleaf go green.
Image source: Getty Images.
2. Ontario's dispensary licensing
In Canada, perhaps the most important thing to monitor is the newly implemented license review process for dispensaries in Ontario.
For those who may not be aware, Ontario had been working with a lottery system to assign dispensary licenses in the province through the end of 2019. This process worked miserably, with a meager 24 retail locations open on the one-year anniversary of recreational weed sales commencing (Oct. 17, 2019). The new process is more traditional and involves submitting an application that'll then be vetted. Altering the process was expected to push the total number of open dispensaries to around 250 by the end of 2020.
The question is, will Ontario, Canada's most-populous province, get anywhere near this 250 figure considering the delays encountered by the coronavirus disease 2019 (COVID-19) pandemic?
Licensed producers like Aurora Cannabis (NYSE: ACB) are very much counting on Ontario to get its act together. Despite closing five of its smaller production facilities and halting construction on two mammoth projects, Aurora still projects as one of the largest weed producers. If Ontario can effectively open more locations in 2020, Aurora Cannabis may have some hope of offloading some of its inventory and focusing on higher-margin derivatives, such as edibles and vapes.
Image source: Getty Images.
3. COVID-19
The coronavirus pandemic is another catalyst that could have positive or negative implications for the North American cannabis industry.
Initial data appears to show that nonessential business shutdowns and stay-at-home orders led consumers to stock up on marijuana products. This was particularly noticeable in Canada, where retail sales from cannabis stores in March (and April) rose by approximately 20% from where they were in February. It's possible more open dispensaries in Ontario aided this sales growth, but it very well could have been fueled by consumers stocking up ahead of lockdowns.
The question is, do we see this heightened demand continue as COVID-19 uncertainty persists, or was this a one-time bump-up in demand caused by the pandemic? Since retail trade sales data from Canada tends to lag by more than two months, and COVID-19 restrictions differ greatly by U.S. state, it could be months before we know the answer to this question.
Image source: Getty Images.
4. Cannabis banking reform in the U.S.
Though the legalization of marijuana at the federal level is probably off the table in the U.S., there's still the possibility (albeit slim) that we could see meaningful banking reform in 2020.
Since cannabis is an illicit substance in the U.S. at the federal level, banks and credit unions often keep their distance from marijuana-based businesses, even in fully legalized states. Financial institutions simply don't want to take on the financial and/or criminal risks of purposefully subverting a federal law. But for marijuana businesses, this often leaves them without adequate access to traditional forms of financing. It's possible that the COVID-19 pandemic may encourage lawmakers to lessen the financial burdens on the cannabis industry in legalized states, and that might start with federal cannabis banking reform.
Interestingly, the lack of federal cannabis banking reform has been a great thing for real estate investment trust Innovative Industrial Properties (NYSE: IIPR). Because MSOs have struggled to gain access to traditional forms of financing, Innovative Industrial Properties has leaned on sale-leaseback agreements to grow its asset portfolio.
With sale-leaseback agreements, Innovative Industrial Properties acquires a cultivation facility or processing site for cash, then immediately leases the property back to the seller for an extended period of time (often 10 to 20 years). As long as cannabis banking reform remains off the table in Washington, D.C., IIP will maintain quite the competitive advantage.
Image source: Getty Images.
5. Derivatives growth
Lastly, pay close attention to derivatives growth, especially in Canada. Derivatives being alternative consumption options, other than dried cannabis flower.
If you recall, Health Canada initially delayed the launch of derivatives in dispensaries until mid-December. This delay was met by the aforementioned dispensary shortage in Ontario, as well as supply disruptions brought on by COVID-19. In other words, derivatives pretty much had no chance of a successful launch in the first-half of 2020 given these obstacles.
However, we've been witnessing Canadian producers scaling down their operations and focusing on higher-margin product lines. We've also seen more dispensaries open up in Ontario in recent months. This suggests that higher-margin derivatives have an opportunity to become a driving force for the Canadian pot industry for the remainder of 2020.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Innovative Industrial Properties. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Licensed producers like Aurora Cannabis (NYSE: ACB) are very much counting on Ontario to get its act together. In my view, New Jersey is the likeliest of all states to give recreational pot the green light in 2020, but I wouldn't be surprised to see Arizona added to this list within the next couple of weeks. Interestingly, the lack of federal cannabis banking reform has been a great thing for real estate investment trust Innovative Industrial Properties (NYSE: IIPR). | Licensed producers like Aurora Cannabis (NYSE: ACB) are very much counting on Ontario to get its act together. Right now, we know that three states are, for certain, voting on a cannabis measure come November -- New Jersey, Mississippi, and South Dakota. Interestingly, the lack of federal cannabis banking reform has been a great thing for real estate investment trust Innovative Industrial Properties (NYSE: IIPR). | Licensed producers like Aurora Cannabis (NYSE: ACB) are very much counting on Ontario to get its act together. Ontario's dispensary licensing In Canada, perhaps the most important thing to monitor is the newly implemented license review process for dispensaries in Ontario. It's possible that the COVID-19 pandemic may encourage lawmakers to lessen the financial burdens on the cannabis industry in legalized states, and that might start with federal cannabis banking reform. | Licensed producers like Aurora Cannabis (NYSE: ACB) are very much counting on Ontario to get its act together. As any marijuana stock investor can tell you, the past 15 months haven't been pretty for pot stocks. It's possible that the COVID-19 pandemic may encourage lawmakers to lessen the financial burdens on the cannabis industry in legalized states, and that might start with federal cannabis banking reform. |
37365.0 | 2020-07-15 00:00:00 UTC | Why Marijuana Stocks Popped Wednesday | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-popped-wednesday-2020-07-15 | nan | nan | What happened
Shares of leading Canadian cannabis stocks Aurora Cannabis (NYSE: ACB), Aphria Inc. (NASDAQ: APHA), and Canopy Growth (NYSE: CGC) popped in early trading Wednesday. The move followed a report by BBN Bloomberg that Aurora and Aphria had recently discussed a possible merger, but that those talks broke down last week.
Investors are snapping up marijuana stocks today anyway, though. In afternoon trading, Aurora shares are selling 3.7% higher as of 1:05 p.m. EDT, Aphria is up 4.8%, and even Canopy -- which is not involved in the buyout talks at all -- is up 3.3%.
Image source: Getty Images.
So what
Apparently, talks got hung up on negotiations regarding who would run the merged entity (the composition of the board of directors) and salaries for senior executives.
Those seem like items that could be worked out in a future merger attempt, however. Meanwhile, the broad outlines of the merger would have seen Aphria shareholders take control of 51% of stock in the merged company in an all-stock buyout, with Aurora shareholders getting the remaining 49%. The parties had also identified about $200 million worth of costs that could be reduced in a combined entity through synergies.
And of course, if completed, the merger would have created a "global cannabis behemoth" (says BBN Bloomberg) worth 3.5 billion Canadian dollars ($2.6 billion) doing nearly $800 million in annual sales across 25 countries, potentially giving the company enough scale to shore up sinking profit margins.
Now what
That prospect should prove attractive to cannabis companies -- and cannabis investors as well -- perhaps leading to a revival of merger talks between Aurora and Aphria at a later date. Or between Canopy Growth and Aurora. Or between Canopy and Aphria. Or between other players in the global marijuana market, for that matter.
In short, now that the idea of creating a marijuana super-company has been raised, it's unlikely to disappear. Investors are betting that someone, somewhere will find a way to make a merger happen, and that once someone succeeds in making it happen, this will be good news for investors in marijuana stocks.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | What happened Shares of leading Canadian cannabis stocks Aurora Cannabis (NYSE: ACB), Aphria Inc. (NASDAQ: APHA), and Canopy Growth (NYSE: CGC) popped in early trading Wednesday. The move followed a report by BBN Bloomberg that Aurora and Aphria had recently discussed a possible merger, but that those talks broke down last week. In afternoon trading, Aurora shares are selling 3.7% higher as of 1:05 p.m. EDT, Aphria is up 4.8%, and even Canopy -- which is not involved in the buyout talks at all -- is up 3.3%. | What happened Shares of leading Canadian cannabis stocks Aurora Cannabis (NYSE: ACB), Aphria Inc. (NASDAQ: APHA), and Canopy Growth (NYSE: CGC) popped in early trading Wednesday. And of course, if completed, the merger would have created a "global cannabis behemoth" (says BBN Bloomberg) worth 3.5 billion Canadian dollars ($2.6 billion) doing nearly $800 million in annual sales across 25 countries, potentially giving the company enough scale to shore up sinking profit margins. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | What happened Shares of leading Canadian cannabis stocks Aurora Cannabis (NYSE: ACB), Aphria Inc. (NASDAQ: APHA), and Canopy Growth (NYSE: CGC) popped in early trading Wednesday. Now what That prospect should prove attractive to cannabis companies -- and cannabis investors as well -- perhaps leading to a revival of merger talks between Aurora and Aphria at a later date. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Rich Smith has no position in any of the stocks mentioned. | What happened Shares of leading Canadian cannabis stocks Aurora Cannabis (NYSE: ACB), Aphria Inc. (NASDAQ: APHA), and Canopy Growth (NYSE: CGC) popped in early trading Wednesday. Now what That prospect should prove attractive to cannabis companies -- and cannabis investors as well -- perhaps leading to a revival of merger talks between Aurora and Aphria at a later date. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. |
37366.0 | 2020-07-14 00:00:00 UTC | Better Buy: Aurora Cannabis vs. Cronos Group | ACB | https://www.nasdaq.com/articles/better-buy%3A-aurora-cannabis-vs.-cronos-group-2020-07-14 | nan | nan | When it comes to Canadian cannabis companies, Aurora Cannabis (NYSE: ACB) has long had an upper hand. Aurora was already thriving with its medical cannabis business when it began to draw even more attention after the recreational market opened in Canada in 2018. A few major mistakes and external headwinds pulled Aurora to the ground last year, but its recent momentum has brought it back to the spotlight again.
Meanwhile, Cronos Group | When it comes to Canadian cannabis companies, Aurora Cannabis (NYSE: ACB) has long had an upper hand. Aurora was already thriving with its medical cannabis business when it began to draw even more attention after the recreational market opened in Canada in 2018. A few major mistakes and external headwinds pulled Aurora to the ground last year, but its recent momentum has brought it back to the spotlight again. | When it comes to Canadian cannabis companies, Aurora Cannabis (NYSE: ACB) has long had an upper hand. Aurora was already thriving with its medical cannabis business when it began to draw even more attention after the recreational market opened in Canada in 2018. A few major mistakes and external headwinds pulled Aurora to the ground last year, but its recent momentum has brought it back to the spotlight again. | When it comes to Canadian cannabis companies, Aurora Cannabis (NYSE: ACB) has long had an upper hand. Aurora was already thriving with its medical cannabis business when it began to draw even more attention after the recreational market opened in Canada in 2018. Meanwhile, Cronos Group | When it comes to Canadian cannabis companies, Aurora Cannabis (NYSE: ACB) has long had an upper hand. Aurora was already thriving with its medical cannabis business when it began to draw even more attention after the recreational market opened in Canada in 2018. A few major mistakes and external headwinds pulled Aurora to the ground last year, but its recent momentum has brought it back to the spotlight again. |
37367.0 | 2020-07-14 00:00:00 UTC | 5 Awful Stocks Robinhood Investors Are Buying | ACB | https://www.nasdaq.com/articles/5-awful-stocks-robinhood-investors-are-buying-2020-07-14 | nan | nan | No matter how long you've been an investor, there's simply nothing that could have prepared you for what 2020 has offered thus far. In a roughly four-month span, investors have dealt with about a decade's worth of volatility due to the unprecedented coronavirus disease 2019 (COVID-19) pandemic.
Of course, periods of panic and heightened volatility have generally served long-term investors well. That's because every stock market correction in history (save for the current correction) has eventually been erased by a bull market rally. Buying great stocks and hanging onto them for a long period of time is a strategy with a high success rate.
Image source: Getty Images.
However, panic and volatility can have negative consequences, too. Online investment platform Robinhood, which has been especially successful in courting younger/millennial investors with the lure of commission-free trades and the gift of free stock once you open an account, is one such instance of the dangers that can arise during periods of heightened volatility.
While some of its members have a long-term mindset, the typical "Robinhood investor" is a short-term trader who's usually chasing today's hottest stocks. Since predicting short-term movements can't be done with any accuracy, it's a dangerous game for young investors to be playing.
Worst of all, some of the most popular stocks on the Robinhood platform are absolutely awful companies. Here are five such stocks that retail investors apparently love, but which you should avoid like the plague.
The Nikola Badger electric truck. Image source: Nikola.
Nikola
Being brutally honest, the entire electric vehicle (EV) industry, including NIO (NYSE: NIO), Tesla (NASDAQ: TSLA), Workhorse Group, and Tortoise Acquisition, look to be in one massive retail trader-fueled bubble. But none is priced more out of whack than Nikola (NASDAQ: NKLA).
Short-term traders have watched Tesla and NIO defy gravity for weeks, and they simply figure that Nikola and its $20 billion market cap can do the same. After all, Nikola did unveil its Badger EV truck, and initial deposit demand following that unveil was presumed to be strong.
But there's a problem here: Nikola hasn't sold a single EV or fuel-cell vehicle... ever.
The company hopes to begin production of the Badger next year, but it's a veritable certainly that snags and hurdles will arise. Both Tesla and NIO have dealt with surprises of their own, such as NIO abandoning its plan to build a factory in Shanghai to make its own EVs, and Tesla delaying the debut of new models on countless occasions over the past decade. If investors think that Nikola is going from concept to full-bore production at the flip of a switch, they're in for a big surprise. Expect Nikola to lose a substantial amount of money over the next few years.
Image source: Getty Images.
Aurora Cannabis
Millennial-favorite marijuana stock Aurora Cannabis (NYSE: ACB) is another one of those head-scratcher investments. While marijuana stocks have pretty much all performed poorly since the end of the first quarter of 2019, Aurora has been especially awful, with its share price down around 90% over the trailing 16-month period.
At one time, Aurora was expected to lead the world in cannabis output, and it had access to two dozen markets outside of Canada. This suggested that it would use economies-of-scale to produce very low-cost, high-quality weed, and be able to export a significant amount of this marijuana to medical marijuana-legal foreign markets. Unfortunately, regulatory-based supply concerns have led to bottlenecks in Canada, and very few overseas markets are accepting cannabis imports. As a result, Aurora has shuttered five production facilities, halted construction on two others, and sold a 1-million-square-foot greenhouse.
But the real disaster here is the company's balance sheet. Aurora Cannabis continues to dilute the heck out of its shareholders with at-the-market offerings and all-share acquisitions. It's also lugging around goodwill that accounts for more than half of its total assets. My expectation is that Aurora Cannabis will write down more than half of its total assets.
Image source: American Airlines.
American Airlines
Robinhood investors have also been obsessed with brand-name stocks as COVID-19 rebound candidates. Perhaps none fits this thesis more than American Airlines Group (NASDAQ: AAL). Before the stock market fell off a cliff in late February, approximately 14,000 Robinhood accounts owned American Airlines. Today this figure is above 659,000 accounts.
Although American Airlines was able to secure bailout funds from the federal government tied to the coronavirus pandemic, there's little argument that it's the worst-of-breed among major airlines. As of its most recent quarterly filing, it had close to $3.6 billion in cash and cash equivalents, but was sporting an unsightly $34.1 billion in total debt. Mind you, this doesn't include a $3.5 billion bond offering dangled in late June that bore a 12% -- yes, 12% -- interest rate. With borrowing rates near record lows, this rate alone tells you everything you need to know about the risk tied to American Airlines' business model.
It's also unclear when, exactly, things will return to normal for the airlines. It could take years before capacity returns to levels seen in 2019. That's worrisome for shareholders, because American was required to halt share buybacks and its dividend as conditions of receiving financial assistance tied to COVID-19. There's really no longer a viable reason to own any major U.S. airline stock, let alone the one with the worst balance sheet.
Image source: Getty Images.
Callon Petroleum
Robinhood investors have also been infatuated with trying to catch falling knives in the oil and gas industry. The highly volatile driller Callon Petroleum (NYSE: CPE) had fewer than 4,000 accounts holding its stock in early March. Today, more than 110,000 Robinhood members are onboard for the ride. The problem is, that ride may end up breaking hearts and emptying wallets.
In July 2019, Callon announced that it would acquire Carrizo Oil & Gas in an all-stock deal for a $3.2 billion price tag, more than half of which was tied to the assumption of Carrizo's debt. The deal was hailed by both companies as transformational, with the combined entity having increased scale in the Permian Basin and Eagle Ford Shale in Texas, improved cash flow potential, and cost synergies. Then COVID-19 hit, and this bullet-point list of benefits has been thrown out the window.
As of its most recent quarter, Callon Petroleum had nearly $3.3 billion in debt (most of which is due in 2023 or later) and only $14.8 million in cash and cash equivalents. If Q1 2020 was any indication, simply servicing the company's debt is going to cost more than $80 million a year. And, to make matters worse, Callon's creditor's reduced its available line from $2 billion to $1.7 billion, with $1.35 billion already drawn down. Callon looks to be inching its way toward an eventual bankruptcy reorganization, and that'll likely wipe out common stockholders.
Image source: Getty Images.
Hertz
Finally -- and maybe the most baffling investment of the group -- Robinhood investors have piled into rental car giant Hertz (NYSE: HTZ). As a reminder, Hertz declared Chapter 11 bankruptcy on May 22, but has seen the number of Robinhood accounts holding its stock explode from around 44,000 to almost 148,000 since the announcement.
Though there has been some speculation that Hertz would issue common stock during its bankruptcy proceedings (a move that the company has now recanted), and that an outside party may be interested in acquiring some or all of its assets, the fact remains that Hertz is bankrupt. While it'll be able to restructure its debt and remain in business during these proceedings, it's very likely that shareholders aren't going to receive anything when Hertz remerges from bankruptcy. In other words, some 148,000 Robinhood investors could see their Hertz investment go to $0.
And if you don't believe me, take it straight from the horse's mouth. Before Hertz shelved its share offering, a filing from the company with the Securities and Exchange Commission had this to say:
We also expect our stockholders' equity to decrease as we use cash on hand to support our operations in bankruptcy. Consequently, there is a significant risk that the holders of our common stock, including purchasers in this offering, will receive no recovery under the Chapter 11 Cases and that our common stock will be worthless.
Avoid Hertz, and every other stock on this list, like the plague.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Millennial-favorite marijuana stock Aurora Cannabis (NYSE: ACB) is another one of those head-scratcher investments. Online investment platform Robinhood, which has been especially successful in courting younger/millennial investors with the lure of commission-free trades and the gift of free stock once you open an account, is one such instance of the dangers that can arise during periods of heightened volatility. The deal was hailed by both companies as transformational, with the combined entity having increased scale in the Permian Basin and Eagle Ford Shale in Texas, improved cash flow potential, and cost synergies. | Aurora Cannabis Millennial-favorite marijuana stock Aurora Cannabis (NYSE: ACB) is another one of those head-scratcher investments. Nikola Being brutally honest, the entire electric vehicle (EV) industry, including NIO (NYSE: NIO), Tesla (NASDAQ: TSLA), Workhorse Group, and Tortoise Acquisition, look to be in one massive retail trader-fueled bubble. With borrowing rates near record lows, this rate alone tells you everything you need to know about the risk tied to American Airlines' business model. | Aurora Cannabis Millennial-favorite marijuana stock Aurora Cannabis (NYSE: ACB) is another one of those head-scratcher investments. Online investment platform Robinhood, which has been especially successful in courting younger/millennial investors with the lure of commission-free trades and the gift of free stock once you open an account, is one such instance of the dangers that can arise during periods of heightened volatility. See the 10 stocks *Stock Advisor returns as of June 2, 2020 Sean Williams has no position in any of the stocks mentioned. | Aurora Cannabis Millennial-favorite marijuana stock Aurora Cannabis (NYSE: ACB) is another one of those head-scratcher investments. Image source: Nikola. Image source: American Airlines. |
37368.0 | 2020-07-13 00:00:00 UTC | Why Aphria Stock Jumped Today | ACB | https://www.nasdaq.com/articles/why-aphria-stock-jumped-today-2020-07-13 | nan | nan | What happened
Shares of Aphria (NASDAQ: APHA) climbed 8.8% on Monday, following an analyst upgrade of the marijuana stock.
So what
Stifel analyst W. Andrew Carter lifted his rating on Aphria's stock to buy from hold and placed a $5.90 target price on its shares. His new price forecast represents potential gains for investors of 26%, based on Aphria's current stock price of $4.68.
The marijuana stock Aphria rose sharply on Monday. Image source: Getty Images.
Carter argues that Aphria should trade at a premium valuation relative to peers such as Aurora Cannabis (NYSE: ACB), due to its superior balance sheet and profitability metrics.
Now what
The analyst says Aphria's upcoming fourth-quarter results will show that its sales doubled in fiscal 2020, which ended on May 31, to $390 million. For fiscal 2021 and 2022, he expects the pot producer's sales to rise 21% and 29%, respectively, to $470 million and $610 million, driven in part by new retail store openings in Canada. Carter forecasts that Aphria will generate positive cash flow in 2021 and as much as $100 million in operating cash flow by 2022.
In turn, he predicts investors will eventually value Aphria at a premium to its lower-performing rivals. "We believe the fundamental performance will drive a re-rating for the shares," he said.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Carter argues that Aphria should trade at a premium valuation relative to peers such as Aurora Cannabis (NYSE: ACB), due to its superior balance sheet and profitability metrics. So what Stifel analyst W. Andrew Carter lifted his rating on Aphria's stock to buy from hold and placed a $5.90 target price on its shares. Now what The analyst says Aphria's upcoming fourth-quarter results will show that its sales doubled in fiscal 2020, which ended on May 31, to $390 million. | Carter argues that Aphria should trade at a premium valuation relative to peers such as Aurora Cannabis (NYSE: ACB), due to its superior balance sheet and profitability metrics. What happened Shares of Aphria (NASDAQ: APHA) climbed 8.8% on Monday, following an analyst upgrade of the marijuana stock. Carter forecasts that Aphria will generate positive cash flow in 2021 and as much as $100 million in operating cash flow by 2022. | Carter argues that Aphria should trade at a premium valuation relative to peers such as Aurora Cannabis (NYSE: ACB), due to its superior balance sheet and profitability metrics. What happened Shares of Aphria (NASDAQ: APHA) climbed 8.8% on Monday, following an analyst upgrade of the marijuana stock. So what Stifel analyst W. Andrew Carter lifted his rating on Aphria's stock to buy from hold and placed a $5.90 target price on its shares. | Carter argues that Aphria should trade at a premium valuation relative to peers such as Aurora Cannabis (NYSE: ACB), due to its superior balance sheet and profitability metrics. So what Stifel analyst W. Andrew Carter lifted his rating on Aphria's stock to buy from hold and placed a $5.90 target price on its shares. 10 stocks we like better than Aphria Inc. |
37369.0 | 2020-07-13 00:00:00 UTC | Better Buy: OrganiGram vs. Aurora Cannabis | ACB | https://www.nasdaq.com/articles/better-buy%3A-organigram-vs.-aurora-cannabis-2020-07-13 | nan | nan | If you're looking for two cheap pot stocks to buy, Aurora Cannabis (NYSE: ACB) and OrganiGram Holdings (NASDAQ: OGI) could be good options. They've both struggled in 2020, with Aurora down 54% year to date and OrganiGram falling by 39%. At reduced prices, they could be attractive buys for contrarian investors who are willing to take on some risk.
Let's take a look at which of these stocks is a better fit for your portfolio today.
Is Aurora Cannabis finally on the right path?
Aurora's been one of the riskier buys in the cannabis industry, but there's hope that the Alberta-based cannabis producer is turning things around. In the company's third-quarter results, which Aurora released on May 14, Aurora recorded net sales of 75.5 million Canadian dollars. It's a nice bounce back from what was a troubling second quarter when its net revenue came in at just CA$56 million, which was lower than what it reported in each of the previous three quarters.
Image source: Getty Images.
In addition to sales growth, concerns surrounding profitability and its sheer ability to weather the COVID-19 storm are weighing on many investors. In February, before the pandemic hit North America, investment bank Ello Capital estimated Aurora's liquidity was so bad that it might only have a couple of months of cash left.
But Aurora's cash situation is improving. As of March 31, the company's cash and cash equivalents totaled CA$230.2 million -- up from CA$172.7 million on June 30, 2019. The cannabis producer is also burning through less cash. In Q3, it used up CA$59 million in cash from its day-to-day operating activities. That's the lowest it's been in the past three quarters.
The company's doing what it can to be leaner and in June announced it was laying off a significant amount of its workforce, including 25% of its selling, general and administrative (SG&A) staff. It said there will also be a 30% reduction in production staff, which will happen during the next two quarters. It addition, it's shutting down five facilities across Canada.
It's all in an effort to improve the company's financial health, and Aurora is optimistic that it will post a profit later this year. In Q1, the company reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of CA$50.9 million, which was worse than the CA$36.6 million loss it incurred in the prior-year period.
OrganiGram's also shedding expenses
New Brunswick-based OrganiGram is in a similar boat, as it struggles with keeping its financials out of the red. On July 3, OrganiGram announced it cut 25% of its workforce.
In the same update announcing the staffing changes, OrganiGram said it expects net revenue for the upcoming third quarter will be down from the second quarter. On the plus side, it expects to see SG&A expenses fall next quarter. The company's conference call, which will review the latest results, is scheduled for July 21.
OrganiGram released its Q2 results back on April 14, and they weren't great. Net revenue of CA$23.2 million was down 14% year over year, and its net loss of CA$6.8 million was 7% deeper from the prior-year period. This coming quarterly performance will be the second consecutive period of net revenue decline, which is bad news for its financial position.
The company reported cash of CA$41.1 million as of Feb. 29. In its three most recent quarters, OrganiGram burned through between CA$11 million and CA$16 million from its day-to-day operating activities. But with COVID-19 impacting the business and leading OrganiGram to cut a significant part of its workforce, it could be a sign that things are getting worse.
Which stock should you go with today?
Before deciding which stock to buy, let's compare how they've done against they Horizons Marijuana Life Sciences ETF (OTC: HMLSF) this year:
ACB data by YCharts
Neither of these two stocks are particularly inspiring and both are doing much worse than the Horizons ETF. I wouldn't buy either stock today given that both of these companies look to be in a panic trying to cut costs as quickly as they can. It's concerning when companies lay off such a significant percentage of their workforces.
However, if you're inclined to pick between one of these two stocks, I'd go with Aurora. The company has more resources and assets that it can sell to keep generating cash. And with a keen focus on profitability this year, there's hope that its financials will improve in upcoming quarters.
But with that said, only investors with a high-risk tolerance should consider buying either of these two pot stocks because they are anything but safe investments.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | If you're looking for two cheap pot stocks to buy, Aurora Cannabis (NYSE: ACB) and OrganiGram Holdings (NASDAQ: OGI) could be good options. Before deciding which stock to buy, let's compare how they've done against they Horizons Marijuana Life Sciences ETF (OTC: HMLSF) this year: ACB data by YCharts Neither of these two stocks are particularly inspiring and both are doing much worse than the Horizons ETF. In February, before the pandemic hit North America, investment bank Ello Capital estimated Aurora's liquidity was so bad that it might only have a couple of months of cash left. | If you're looking for two cheap pot stocks to buy, Aurora Cannabis (NYSE: ACB) and OrganiGram Holdings (NASDAQ: OGI) could be good options. Before deciding which stock to buy, let's compare how they've done against they Horizons Marijuana Life Sciences ETF (OTC: HMLSF) this year: ACB data by YCharts Neither of these two stocks are particularly inspiring and both are doing much worse than the Horizons ETF. Net revenue of CA$23.2 million was down 14% year over year, and its net loss of CA$6.8 million was 7% deeper from the prior-year period. | If you're looking for two cheap pot stocks to buy, Aurora Cannabis (NYSE: ACB) and OrganiGram Holdings (NASDAQ: OGI) could be good options. Before deciding which stock to buy, let's compare how they've done against they Horizons Marijuana Life Sciences ETF (OTC: HMLSF) this year: ACB data by YCharts Neither of these two stocks are particularly inspiring and both are doing much worse than the Horizons ETF. As of March 31, the company's cash and cash equivalents totaled CA$230.2 million -- up from CA$172.7 million on June 30, 2019. | If you're looking for two cheap pot stocks to buy, Aurora Cannabis (NYSE: ACB) and OrganiGram Holdings (NASDAQ: OGI) could be good options. Before deciding which stock to buy, let's compare how they've done against they Horizons Marijuana Life Sciences ETF (OTC: HMLSF) this year: ACB data by YCharts Neither of these two stocks are particularly inspiring and both are doing much worse than the Horizons ETF. But Aurora's cash situation is improving. |
37370.0 | 2020-07-11 00:00:00 UTC | 4 Times When Cannabis Companies Badly Missed Their Forecasts | ACB | https://www.nasdaq.com/articles/4-times-when-cannabis-companies-badly-missed-their-forecasts-2020-07-11 | nan | nan | It's easy for investors to get caught up in the hype surrounding the cannabis industry, especially when expectations are sky-high. And in many cases, it's cannabis companies that are making life difficult for themselves by coming up with aggressive forecasts only to fall short of them later.
There are plenty of examples of cannabis companies falling short of their own expectations. Below are four of the worst occurrences.
1. Canopy Growth calling for $1 billion in revenue
In April 2019, then-CEO Bruce Linton projected that Canopy Growth (NYSE: CGC) would generate over 1 billion Canadian dollars ($744 million) in revenue over a 12-month period starting April 1, 2019, which is the start of the company's fiscal year. On June 1 of this year, the company released its results for 2019, ending March 31. The Ontario-based pot producer was nowhere near reaching that target.
Image source: Getty Images.
Revenue for the full year came in at CA$439.6 million -- not even half of the amount Linton was projecting just over a year ago. Linton's not the only one to blame, however, as even analysts were expecting the company's sales to hit CA$840.5 million.
The cannabis industry in Canada has struggled with a shortage of pot shops, and it's been an uphill battle for companies to gain market share. However, even today, with more stores open, Linton's projection would likely be very optimistic. In the fourth quarter, Canopy Growth's net revenue totaled CA$107.9 million. Extrapolated over four quarters, the company's still nowhere near the run rate it would need in order for CA$1 billion to be a realistic goal.
In hindsight, saying Linton's projection was optimistic would be a significant understatement.
2. HEXO expecting to reach CA$400 million in annual sales
When HEXO (NYSE: HEXO) announced in June that it was "on track" to reach its target of CA$400 million in net revenue for the 2020 fiscal year, that seemed like an overly optimistic projection for the company. It was coming off a quarter when it generated just CA$15.9 million in sales -- before excise taxes.
And indeed, HEXO's nowhere near that CA$400 million tally. Over the past four quarters, its net revenue totaled just CA$68 million.
What makes this projection so bad is that in October, only months after saying things were going well, HEXO abandoned its outlook for the year. CEO Sebastien St-Louis defended the move to throw out the forecast, saying, "Given the uncertainties in the marketplace, we have determined that it is the appropriate course of action. We are also placing a greater focus on profitability. We are evaluating our plans and operations to see where we can be even more efficient."
Ironically, profits aren't any better either. HEXO has incurred a net loss in each of its past 10 quarterly results. For the nine months ending April 30, HEXO reported a net loss of CA$377.9 million, compared with CA$24.9 million over the prior-year period.
3. Aurora missing its own sales forecast, one month out
One of the more remarkable misses undoubtedly came from Aurora Cannabis (NYSE: ACB), which missed a sales forecast released just one month before its results. On August 6, 2019, the company provided investors with an update for its fourth-quarter results, which it planned to release the following month. In the update, Aurora said it was expecting net sales to come within a range of CA$100 million and CA$107 million.
Then, on Sept. 11, 2019, Aurora reported that its net revenue for Q4 was just CA$98.9 million, shy of even the lower end of its estimate.
Missing analyst expectations is understandable -- outside analysts are working with many more assumptions than insiders would be. But for a company to miss its own projections is a harder pill for investors to swallow, especially when the results were so near to being released. Aurora's internal reports were likely near completion at the time the update was given, and there should have been complete certainty that the company would hit its forecast.
4. The "Starbucks of cannabis"
Another amusing forecast came from a small cannabis producer, Golden Leaf Holdings, which created some lofty expectations for itself when CEO William Simpson in 2018 said, "Like Starbucks is to coffee, we believe Chalice will be to cannabis." The CEO was referring to the company's Chalice Farms-branded marijuana shops. Today, Golden Leaf is a minnow in a sea of cannabis companies; it has a few locations in the Portland area, but is nowhere near its ambitious goal.
The takeaway for cannabis investors
What's important for investors to remember in all of this is that expectations are just that -- expectations. There's no guarantee they'll come to fruition, and it's risky to base an investment decision on sales or profit numbers that may never materialize. While investors don't want to ignore the future opportunities that exist for a company, they also shouldn't rely on them, especially in an industry like cannabis where there's so much uncertainty and volatility.
At the very least, investors should do their own analysis in assessing how realistic some of these targets are. Aside from the revenue miss by Aurora, all the projections listed here were far too bullish; the companies would have required best-case scenarios in order to meet their expectations.
Investing in pot stocks is a risky venture, and investors are better off scaling back whatever expectations they see and hear from companies because in many cases, they're often going to be a bit too optimistic.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora missing its own sales forecast, one month out One of the more remarkable misses undoubtedly came from Aurora Cannabis (NYSE: ACB), which missed a sales forecast released just one month before its results. The cannabis industry in Canada has struggled with a shortage of pot shops, and it's been an uphill battle for companies to gain market share. Investing in pot stocks is a risky venture, and investors are better off scaling back whatever expectations they see and hear from companies because in many cases, they're often going to be a bit too optimistic. | Aurora missing its own sales forecast, one month out One of the more remarkable misses undoubtedly came from Aurora Cannabis (NYSE: ACB), which missed a sales forecast released just one month before its results. Canopy Growth calling for $1 billion in revenue In April 2019, then-CEO Bruce Linton projected that Canopy Growth (NYSE: CGC) would generate over 1 billion Canadian dollars ($744 million) in revenue over a 12-month period starting April 1, 2019, which is the start of the company's fiscal year. In the fourth quarter, Canopy Growth's net revenue totaled CA$107.9 million. | Aurora missing its own sales forecast, one month out One of the more remarkable misses undoubtedly came from Aurora Cannabis (NYSE: ACB), which missed a sales forecast released just one month before its results. Canopy Growth calling for $1 billion in revenue In April 2019, then-CEO Bruce Linton projected that Canopy Growth (NYSE: CGC) would generate over 1 billion Canadian dollars ($744 million) in revenue over a 12-month period starting April 1, 2019, which is the start of the company's fiscal year. HEXO expecting to reach CA$400 million in annual sales When HEXO (NYSE: HEXO) announced in June that it was "on track" to reach its target of CA$400 million in net revenue for the 2020 fiscal year, that seemed like an overly optimistic projection for the company. | Aurora missing its own sales forecast, one month out One of the more remarkable misses undoubtedly came from Aurora Cannabis (NYSE: ACB), which missed a sales forecast released just one month before its results. Revenue for the full year came in at CA$439.6 million -- not even half of the amount Linton was projecting just over a year ago. HEXO expecting to reach CA$400 million in annual sales When HEXO (NYSE: HEXO) announced in June that it was "on track" to reach its target of CA$400 million in net revenue for the 2020 fiscal year, that seemed like an overly optimistic projection for the company. |
37371.0 | 2020-07-10 00:00:00 UTC | Aurora Cannabis (ACB): Transformation on Track | ACB | https://www.nasdaq.com/articles/aurora-cannabis-acb%3A-transformation-on-track-2020-07-10 | nan | nan | Aurora Cannabis (ACB – Research Report) continues to confirm a strong transformation to a cannabis company focused on profitable growth while Canopy Growth (CGC – Research Report) is still chasing large market opportunities with wild spending. The company is now on track to spend about 25% of the SG&A as the largest Canadian cannabis stock while approaching the same revenue levels.
The Edmonton-based company is a far better value on weakness despite having no major investor and struggling over the last year with a weak balance sheet. The company still has work to get done to reach EBITDA profits, but Aurora Cannabis is the far better stock with the transformation on track.
Operational Excellence
The best part of the story is that Aurora Cannabis set a transformational target in February and the company is already hitting this goal. With the targets in sight on transforming SG&A costs, the company is now moving forward with consolidating production facilities to the low-cost areas with considerable capacity and eliminating the high-cost facilities no longer needed for the global opportunity that never materialized.
Aurora Cannabis forecasts reaching an SG&A target of C$42 million in FQ1, thereby cutting operational expenses by an astonishing 50% in just a few months. Staff levels were cut by 25% to achieve these goals with some apparent high cost consultants let go as well.
The company can now achieve EBITDA profits on substantially lower revenues. The good news is that consolidating production facilities will help improve gross margins with Pablo Zuanic of Cantor Fitzgerald forecasting an 8-point boost to gross margins.
In prior quarters, Aurora Cannabis was stuck on mid-40s gross margins while clearly over producing inventory similar to the rest of the Canadian cannabis industry. The consolidation of five small facilities will help reduce costs that were averaging C$1.15 per gram while other industry players were down below C$1.00.
Once the cannabis company reaches C$100 million in quarterly revenues, the new 50% gross margins will generate up to C$8 million in operating income. This metric assumes a stable C$42 million SG&A quarterly run rate as revenues rise.
Focused Opportunity
Canopy Growth highlighted how the once promising global opportunity is limited to the U.S., Canada and Germany. These three countries are set to account of C$63 billion or up to 90% of the global total addressable market by 2023.
Aurora Cannabis is a strong player in both the Canadian cannabis market and Germany medical that make up the majority of the revenue TAM outside of U.S. Similar to Canopy Growth, both companies have recently entered the U.S. CBD market while being currently blocked from the massive C$42 billion TAM in the U.S. recreational and medical cannabis markets.
The key here is that both companies have the same market opportunities and areas of focus, but one still plans to spend wildly on SG&A due to a C$2.0 billion cash balance while the other has become a strong operator due to the requirement to focus. Aurora Cannabis is on the path to positive EBITDA while Canopy Growth has no apparent EBITDA profit goals.
Takeaway
The key investor takeaway is that the valuation equation for Aurora Cannabis remains far more compelling here as the market has pushed the stock back down to a market valuation of $1.4 billion. Canopy Growth is far too expensive at $5.7 billion with no meaningful improvement in financials while Aurora Cannabis is on schedule for solid EBITDA profits in FY21 starting in July.
To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclosure: No position.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (ACB – Research Report) continues to confirm a strong transformation to a cannabis company focused on profitable growth while Canopy Growth (CGC – Research Report) is still chasing large market opportunities with wild spending. Operational Excellence The best part of the story is that Aurora Cannabis set a transformational target in February and the company is already hitting this goal. Aurora Cannabis forecasts reaching an SG&A target of C$42 million in FQ1, thereby cutting operational expenses by an astonishing 50% in just a few months. | Aurora Cannabis (ACB – Research Report) continues to confirm a strong transformation to a cannabis company focused on profitable growth while Canopy Growth (CGC – Research Report) is still chasing large market opportunities with wild spending. Aurora Cannabis forecasts reaching an SG&A target of C$42 million in FQ1, thereby cutting operational expenses by an astonishing 50% in just a few months. Aurora Cannabis is on the path to positive EBITDA while Canopy Growth has no apparent EBITDA profit goals. | Aurora Cannabis (ACB – Research Report) continues to confirm a strong transformation to a cannabis company focused on profitable growth while Canopy Growth (CGC – Research Report) is still chasing large market opportunities with wild spending. Aurora Cannabis is a strong player in both the Canadian cannabis market and Germany medical that make up the majority of the revenue TAM outside of U.S. Aurora Cannabis is on the path to positive EBITDA while Canopy Growth has no apparent EBITDA profit goals. | Aurora Cannabis (ACB – Research Report) continues to confirm a strong transformation to a cannabis company focused on profitable growth while Canopy Growth (CGC – Research Report) is still chasing large market opportunities with wild spending. The company still has work to get done to reach EBITDA profits, but Aurora Cannabis is the far better stock with the transformation on track. Aurora Cannabis forecasts reaching an SG&A target of C$42 million in FQ1, thereby cutting operational expenses by an astonishing 50% in just a few months. |
37372.0 | 2020-07-10 00:00:00 UTC | 1 Big Difference in Strategy Between Canopy Growth and Aurora Cannabis | ACB | https://www.nasdaq.com/articles/1-big-difference-in-strategy-between-canopy-growth-and-aurora-cannabis-2020-07-10 | nan | nan | Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) are among the biggest names in the cannabis industry. The two Canadian pot producers are rivals, their share prices are down more 50% in the past year, and they're both navigating through some challenging times in the industry amid the COVID-19 pandemic.
But one area where the two companies deviate is when it comes to strategy -- specifically, whether to focus on beverages. It's an important decision and one that may determine which stock does better not just this year, but over the long term.
Canopy Growth is bullish on beverages
It shouldn't be all that surprising to investors that Canopy Growth sees beverages as a key part of its strategy, given that beer maker Constellation Brands (NYSE: STZ) owns a 39% stake in the company.
Image source: Getty Images.
On the fourth-quarter earnings call May 30, Canopy Growth confirmed that it's already launched three beverages; four more are on the way sometime over the next three quarters. The company's already shipped more than 500,000 drinks in what's still a fairly new segment of the market. It was only in December 2019 that edible products, including beverages, started hitting store shelves in Canada.
Some industry insiders believe cannabis beverages could account for as much as 30% of pot sales in Canada. In the U.S. market, consulting company Zenith Global estimates that sales will hit $1.4 billion by 2023 -- which is up from approximately $227 million in 2019.
Canopy Growth is among those that are bullish on beverages, which is why in October 2019 the cannabis producer announced it was acquiring a 72% stake in sports nutrition company Biosteel, which makes sports beverages.
With Biosteel and Constellation Brands, Canopy Growth's armed itself with some significant resources to help tap into the beverage market.
Aurora Cannabis isn't convinced
At Aurora, though, beverages aren't a key part of the strategy today. On the company's third-quarterearnings callback in May, interim CEO Michael Singer pointed out that Aurora "launched across a broad series of categories in December, kind of first out of the gate, and we had most of the major categories with the exception of beverage in December." That was the only reference to beverages or drinks on the entire call, and it shouldn't come as a surprise to investors.
A year ago, Cam Battley, who was the company's chief corporate officer at the time, stated that "we've made a rational decision to focus priorities in areas that we know have strong demand based on a model we've seen in legal U.S. states." Indeed, with less than 1% of pot sales coming from beverages in the U.S. markets, the category may not appear so appealing.
Aurora hasn't ruled out beverages entirely, but it's clear that they aren't a priority for the company at this time. Even with a change in executives -- Battley would leave his position with Aurora in December -- the company remains focused on other areas of its business.
Which company is right?
Whether you believe Aurora is right or Canopy Growth is right will largely depend on how big you think the market will end up being for cannabis beverages, and that can be difficult to estimate.
However, I do see one problem with Aurora's approach: A key part of its analysis a year ago involved looking at the U.S. markets. Established beverage companies aren't going to be jumping into an industry that's still illegal at the federal level; that means they can't transfer products along state lines, which could potentially jeopardize their banking relationships.
That leaves the U.S. cannabis market dependent on cannabis producers that may not be familiar with making beverages. And that's why the relatively small market share that cannabis beverages make up in the U.S. deserves an asterisk.
In Canada, where pot is legal and beverage companies don't face the same obstacles, there will be more opportunities for growth in the segment. Being a first-mover could give Canopy Growth an advantage and help it dominate the market, at least in its early stages. And any way that the cannabis producer can differentiate its sales mix and strengthen its top line could be a big bonus for investors.
Canopy Growth's fourth-quarter results in May showed that net sales were up 15% year over year. Aurora also reported its most recent quarterly results in May, and it saw similar growth numbers, with net revenue up by 16%.
Both companies could benefit from another source of revenue growth, especially with COVID-19 weighing down both Canadian and U.S. economies. And right now, Canopy Growth is in an excellent position to cash in on a potentially lucrative beverage opportunity, making its stock the better buy today.
Over the past 12 months, shares of Aurora Cannabis are down 86% while Canopy Growth's stock fallen by a more modest 58% -- which is better than the 63% decline in the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) during the same period. The delta between the two cannabis stocks could get wider as the year progresses, especially if beverages inject some added sales growth into Canopy Growth's top line.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) are among the biggest names in the cannabis industry. The two Canadian pot producers are rivals, their share prices are down more 50% in the past year, and they're both navigating through some challenging times in the industry amid the COVID-19 pandemic. A year ago, Cam Battley, who was the company's chief corporate officer at the time, stated that "we've made a rational decision to focus priorities in areas that we know have strong demand based on a model we've seen in legal U.S. | Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) are among the biggest names in the cannabis industry. Canopy Growth is bullish on beverages It shouldn't be all that surprising to investors that Canopy Growth sees beverages as a key part of its strategy, given that beer maker Constellation Brands (NYSE: STZ) owns a 39% stake in the company. Canopy Growth is among those that are bullish on beverages, which is why in October 2019 the cannabis producer announced it was acquiring a 72% stake in sports nutrition company Biosteel, which makes sports beverages. | Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) are among the biggest names in the cannabis industry. Canopy Growth is bullish on beverages It shouldn't be all that surprising to investors that Canopy Growth sees beverages as a key part of its strategy, given that beer maker Constellation Brands (NYSE: STZ) owns a 39% stake in the company. Canopy Growth is among those that are bullish on beverages, which is why in October 2019 the cannabis producer announced it was acquiring a 72% stake in sports nutrition company Biosteel, which makes sports beverages. | Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) are among the biggest names in the cannabis industry. Canopy Growth is bullish on beverages It shouldn't be all that surprising to investors that Canopy Growth sees beverages as a key part of its strategy, given that beer maker Constellation Brands (NYSE: STZ) owns a 39% stake in the company. A year ago, Cam Battley, who was the company's chief corporate officer at the time, stated that "we've made a rational decision to focus priorities in areas that we know have strong demand based on a model we've seen in legal U.S. |
37373.0 | 2020-07-08 00:00:00 UTC | Aurora: Is the New CCO the Right Fit? Analyst Chimes In | ACB | https://www.nasdaq.com/articles/aurora%3A-is-the-new-cco-the-right-fit-analyst-chimes-in-2020-07-08 | nan | nan | Over the past few months, Aurora Cannabis (ACB) has taken several steps to enact a U-turn for its ailing business. Along with a reverse stock split to ensure it remains listed on the New York Stock Exchange, it has closed some of its smaller facilities, as well as put the brakes on the construction of two new sites.
Another move has been to acquire Reliva, which has given it access to the U.S. CBD space. That acquisition brought with it Reliva’s CEO, Miguel Martin, who Aurora has just appointed as its new Chief Commercial Officer.
Weighing in on the appointment, Jeffries analyst Owen Bennett is not sure the right choice was made.
“While we don't doubt Mr. Martin is very capable, and has past experience that is very relevant for this position, there could be some disappointment that the position did not go to someone more high profile,” the analyst said.
The past year has been a rough ride for the company that was once one of the most promising Canadian cannabis stocks. Along with a share price that has been slashed by 86%, there has been a mass exodus of top brass, including a co-founder and CEO, another co-founder and President, and a COO. However, the changing of the guard is in line with other cannabis companies’ attempts to gain credibility and trust among investors, after most companies in the fledgling industry have been unable, so far, to fulfill earlier promises.
As a result, Bennett argues, the type of management that takes hold of the reins “is critical for sentiment and the outlook of these businesses.”
Although Bennett likes Martin’s background in regulated industries such as cigarettes and vapes, the analyst believes most of Martin’s experience “appears to be heavily focused on gas stations and convenience stores.”
What Bennett thinks investors might have been hoping for is a different type of CCO. “Experience across a variety of different industries, and across multiple product categories and distribution channel, as well as experience at c-suite level of a major CPG company, may have been preferred,” the analyst said.
Bennett hopes the appointment of the new CEO, to which attention now shifts, will be more on point.
No change, then, to Bennett’s rating, which remains an Underperform (i.e. Sell). The price target stays as is, too, and at C$14 ($10.33) represents possible downside of 16%. (To watch Bennett’s track record, click here)
Among Bennett’s colleagues, Aurora has a Hold consensus rating, based on 3 Buys, 11 Holds and 1 Sell. At C$17.16 ($12.61), the average price target suggests shares have modest upside of 4% from current levels. (See Aurora stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Over the past few months, Aurora Cannabis (ACB) has taken several steps to enact a U-turn for its ailing business. That acquisition brought with it Reliva’s CEO, Miguel Martin, who Aurora has just appointed as its new Chief Commercial Officer. The past year has been a rough ride for the company that was once one of the most promising Canadian cannabis stocks. | Over the past few months, Aurora Cannabis (ACB) has taken several steps to enact a U-turn for its ailing business. That acquisition brought with it Reliva’s CEO, Miguel Martin, who Aurora has just appointed as its new Chief Commercial Officer. No change, then, to Bennett’s rating, which remains an Underperform (i.e. Sell). | Over the past few months, Aurora Cannabis (ACB) has taken several steps to enact a U-turn for its ailing business. As a result, Bennett argues, the type of management that takes hold of the reins “is critical for sentiment and the outlook of these businesses.” Although Bennett likes Martin’s background in regulated industries such as cigarettes and vapes, the analyst believes most of Martin’s experience “appears to be heavily focused on gas stations and convenience stores.” What Bennett thinks investors might have been hoping for is a different type of CCO. (To watch Bennett’s track record, click here) Among Bennett’s colleagues, Aurora has a Hold consensus rating, based on 3 Buys, 11 Holds and 1 Sell. | Over the past few months, Aurora Cannabis (ACB) has taken several steps to enact a U-turn for its ailing business. The past year has been a rough ride for the company that was once one of the most promising Canadian cannabis stocks. Bennett hopes the appointment of the new CEO, to which attention now shifts, will be more on point. |
37374.0 | 2020-07-08 00:00:00 UTC | Medical vs. Recreational Cannabis: Which Is the Future? | ACB | https://www.nasdaq.com/articles/medical-vs.-recreational-cannabis%3A-which-is-the-future-2020-07-08 | nan | nan | The potential of medical marijuana is widely known, not only in Canada and the U.S., but also globally. Many patients find that medical cannabis has helped them with certain health issues where conventional medicine has failed, including chronic pain, post-traumatic stress disorder (PTSD), Crohn's disease, and anxiety.
Meanwhile, recreational cannabis is gaining popularity because of the variety it offers in satisfying consumers looking for an intoxicating or relaxing experience.
To take advantage of this popular and evolving market, two big names in cannabis space, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC), are in a tight race. But before I tell you the progress each has made, let's shed light on the growth of the medical and recreational cannabis markets in Canada and the U.S.
Image Source: Getty Images.
How have medical and recreational cannabis progressed?
Worldwide legal cannabis sales have been impressive. In 2017, the number stood at $9.5 billion; that increased to $12.2 billion in 2018, per data from BDS Analytics. In 2019, medical marijuana made up 71% of total legal pot sales.
Canada legalized medical cannabis in 2001, and since then the market has been thriving. A Marijuana Business Daily research report stated that the number of medical cannabis patients has exploded in Canada between 2004 and 2017. To be precise, the increase is from 7,914 patients in the second quarter of 2014 to 201,398 in Q2 2017. Cannabis oil, which was introduced in the first quarter of 2016, also led to higher sales.
The first wave of recreational cannabis legalization in Canada -- "Cannabis 1.0" -- happened in October 2018 and included flowers, oils, plants, and seeds. Total legal sales in 2018 were $1.6 billion, double the amount spent on just medical cannabis in 2017.
The second wave of legalization, "Cannabis 2.0" in October 2019, made edibles, vapes, beverages, concentrates, topicals, and more legal in the country.
In the U.S., medical marijuana is legal in 33 states and the District of Colombia, while recreational cannabis is legal in 11 states and D.C. The stronger markets -- California, Washington, and Michigan -- have been seeing good sales. Now, the newest legal market, Illinois, is catching attention with strong month-on-month sales since recreational cannabis became legal in January 2020.
Cannabis companies' progress in the market
No doubt, medical cannabis revenue has been robust for both Aurora and Canopy. In fiscal 2019, Aurora reported total revenue of 94.6 million Canadian dollars, out of which its medical offerings contributed CA$29.7 million, while Canadian consumer cannabis revenue and wholesale revenue amounted to CA$44.9 million and CA$20.1 million respectively. Meanwhile, Canopy earned CA$226.3 million in total net revenue, with CA$78.9 million coming from global medical sales and CA$140.5 million from recreational sales.
The hype for recreational marijuana forced not just Aurora and Canopy but most cannabis producers to ramp up production. Unfortunately, external factors like regulatory hold-ups and slow rollout of legal stores pushed consumers toward the black market, affecting the revenue of the licensed producers. The plans for the Cannabis 2.0 launch were also going well until COVID-19 hit. Both Canopy and Aurora have failed to achieve positive EBITDA so far.
That said, things seem to be improving this year with the surge in cannabis sales amid the pandemic. Additionally, Ontario also plans to resume issuing new authorizations for cannabis stores this year. While Aurora hasn't updated its plans for derivatives, Canopy announced the launch of its upcoming cannabis-infused beverages and vapes.
Aurora seems to be recovering and is taking all measures to reduce costs and hit profitability by the first quarter of fiscal 2021.
What does the future hold?
The future of medical cannabis will depend on research. For now, the market seems to be strong and growing. More advanced research may reveal further health benefits of marijuana, thus boosting sales and helping cannabis companies' profits to soar.
Both Aurora and Canopy have made a name in the medical cannabis space now. But they also have Aphria (NASDAQ: APHA) and Organigram (NASDAQ: OGI) in the race, which are in a much better position financially, posting higher revenues and profits while both Aurora and Canopy have yet to hit positive profitability. Shares of Aurora Cannabis, Canopy Growth, Aphria, and Organigram declined 12%, 2%, 3.3%, and 14.2%, respectively, in June, while the SPDR S&P 500 ETF was up by 0.92%.
Data source: YCharts.
When it comes to recreational cannabis, as I stated above, cannabis 2.0 products could turn things around in Canada this year -- as long as the COVID-19 crisis doesn't put a pause on the launch of the upcoming products. With more states legalizing marijuana in the U.S., the long-term opportunities are massive, not only for Canopy and Aurora, but also for the entire cannabis industry. Grand View Research data shows the global legal cannabis market could be worth $73.6 billion by 2027.
That said, it is a volatile industry, so investors need to be cautious before making any investment decisions.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | To take advantage of this popular and evolving market, two big names in cannabis space, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC), are in a tight race. Many patients find that medical cannabis has helped them with certain health issues where conventional medicine has failed, including chronic pain, post-traumatic stress disorder (PTSD), Crohn's disease, and anxiety. Unfortunately, external factors like regulatory hold-ups and slow rollout of legal stores pushed consumers toward the black market, affecting the revenue of the licensed producers. | To take advantage of this popular and evolving market, two big names in cannabis space, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC), are in a tight race. In fiscal 2019, Aurora reported total revenue of 94.6 million Canadian dollars, out of which its medical offerings contributed CA$29.7 million, while Canadian consumer cannabis revenue and wholesale revenue amounted to CA$44.9 million and CA$20.1 million respectively. Meanwhile, Canopy earned CA$226.3 million in total net revenue, with CA$78.9 million coming from global medical sales and CA$140.5 million from recreational sales. | To take advantage of this popular and evolving market, two big names in cannabis space, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC), are in a tight race. Cannabis companies' progress in the market No doubt, medical cannabis revenue has been robust for both Aurora and Canopy. In fiscal 2019, Aurora reported total revenue of 94.6 million Canadian dollars, out of which its medical offerings contributed CA$29.7 million, while Canadian consumer cannabis revenue and wholesale revenue amounted to CA$44.9 million and CA$20.1 million respectively. | To take advantage of this popular and evolving market, two big names in cannabis space, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC), are in a tight race. In 2019, medical marijuana made up 71% of total legal pot sales. Canada legalized medical cannabis in 2001, and since then the market has been thriving. |
37375.0 | 2020-07-08 00:00:00 UTC | 3 Reasons Why It's the Right Time to Buy Trulieve Cannabis | ACB | https://www.nasdaq.com/articles/3-reasons-why-its-the-right-time-to-buy-trulieve-cannabis-2020-07-08 | nan | nan | Right now, the medical cannabis space is one of the very few markets that has vast opportunities to grow, owing to the numerous health benefits it provides. Global research has shown that medical cannabis can help with chronic pain, various neurological disorders (including anxiety and post-traumatic stress disorder, or PTSD), and Crohn's disease, among many others.
Medical cannabis also proves to be an alternate option for many wanting to shift from conventional medicines. Florida-based Trulieve Cannabis (OTC: TCNNF) has seen the true potential of this market and has established strong footing in its home state.
Image source: Getty Images.
A dominant player in its home state
When it comes to cannabis in Florida, Trulieve is the company that comes to mind. There are, of course, other players in the state, but Trulieve has captured a good chunk of the retail space with 51 dispensaries. (The company now operates a total of 53 dispensaries in the U.S., with the other two in California and Connecticut.)
Florida legalized medical cannabis in 2016, and since then the market has been outstanding for medical marijuana. This year, despite the lockdown, cannabis demand has seen an all-time high, hinting at the popularity of the product. The COVID-19 pandemic and the sudden lockdown also increased anxiety and various other mental health issues that cannabis is known to help.
Florida medical cannabis sales surged during the pandemic, with 36,400 ounces of cannabis flower sold during the seven days beginning March 13. That's an increase of 38% over the previous week, and much higher than the average of 22,800 ounces of smokable flower sold per week in the first 10 weeks of 2020.
The company saw dazzling revenue growth of 116% year over year to $96.1 million in the first quarter. It also improved revenue; from fiscal 2019 fourth-quarter revenue of $79.7 million, Trulieve reported positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $49.4 million. That's a jump of 161% from the year-ago period. Adjusted EBITDA also saw an increase of 10% sequentially. Interestingly, Trulieve has managed to earn this chunk of revenue and profits mostly through business in a single state; imagine the growth if it spread its roots to other states.
The company said COVID-19 didn't have much of an impact on its operations -- an especially positive sign compared with its peer MedMen, which is suffering from a cash crunch this year. In its first quarter, Trulieve opened three new stores in Florida, while MedMen had to temporarily shut down five of its medical cannabis outlets in Florida in May. MedMen didn't specify why, but the reasons are evident from the financial struggles that have been pinning it down for a while now. MedMen now has three stores open in the state.
What will the recreational marijuana market bring?
A campaign in Florida tried to legalize recreational marijuana this year, but the pandemic caused numerous challenges.
The lockdown made it hard for activists to collect enough signatures to make recreational legalization proposals qualify for the state's November 2020 ballot. Hence, the group is now trying for a 2022 legalization. The demand is exceptional in the state, so a recreational market will bring additional revenues for Trulieve. But its dependency on medical marijuana could make it difficult for it to make a sudden jump to the new market.
The only concern
Trulieve's revenue growth is no doubt staggering, and medical cannabis demand is unlikely to plummet anytime soon. Trulieve has also secured its financial position with a strong balance sheet that will help it survive the crisis. The company ended the first quarter with $100.8 million in cash and cash equivalents.
What worries me is Trulieve's dependence on a single market: medical marijuana. It's intriguing to note the rate at which peer companies are expanding in various states. Curaleaf and Green Thumb Industries are expanding at rocket speed despite the pandemic. And they have business in both the medical and recreational arenas.
That said, Trulieve is outperforming its Canadian peers, and it has strong fundamentals and footing in Florida from which to expand into other states. Shares of Trulieve are up 6% year to date, while rivals Aurora Cannabis and Canopy Growth are down 52% and 23.3%, respectively.
Trulieve could turn out to be a strong cannabis player when the marijuana industry blossoms after U.S. federal legalization. In other words, it's worth considering if you're interested in long-term growth.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Florida-based Trulieve Cannabis (OTC: TCNNF) has seen the true potential of this market and has established strong footing in its home state. The lockdown made it hard for activists to collect enough signatures to make recreational legalization proposals qualify for the state's November 2020 ballot. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | A dominant player in its home state When it comes to cannabis in Florida, Trulieve is the company that comes to mind. It also improved revenue; from fiscal 2019 fourth-quarter revenue of $79.7 million, Trulieve reported positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $49.4 million. Interestingly, Trulieve has managed to earn this chunk of revenue and profits mostly through business in a single state; imagine the growth if it spread its roots to other states. | Florida legalized medical cannabis in 2016, and since then the market has been outstanding for medical marijuana. In its first quarter, Trulieve opened three new stores in Florida, while MedMen had to temporarily shut down five of its medical cannabis outlets in Florida in May. Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Florida legalized medical cannabis in 2016, and since then the market has been outstanding for medical marijuana. The company saw dazzling revenue growth of 116% year over year to $96.1 million in the first quarter. Trulieve could turn out to be a strong cannabis player when the marijuana industry blossoms after U.S. federal legalization. |
37376.0 | 2020-07-08 00:00:00 UTC | Is Organigram Stock a Buy? | ACB | https://www.nasdaq.com/articles/is-organigram-stock-a-buy-2020-07-08 | nan | nan | Retail cannabis sales in Canada have rebounded from a brief dip in February, but Organigram (NASDAQ: OGI) stock hasn't followed. Shares of the licensed cannabis producer have lost about 30% of their value this year.
The company has pushed back its earnings report for the three months ended May. 31, 2020, by a week to compensate for coronavirus-related difficulties experienced during the hectic period. Now that the company's market value has fallen to a sprightly $299 million, bargain shoppers are wondering if the stock is a buy right now.
Image source: Getty Images.
Reasons to wait
Organigram might look like a bargain at its depressed price, but there's a chance the company will disappoint investors again before the end of the month. Organigram recently postponed its fiscal third-quarter earnings report until Jul. 21, 2020, but still provided a disappointing snapshot of the top line figures. Earlier this month, the company said it expects to report a decline in net revenue compared with the previous three-month period.
Organigram's warning seems out of step with retail cannabis sales reports from Statistics Canada. During Organigram's fiscal second-quarter, cannabis store sales across Canada averaged CA$151 million per month. We don't have data from May yet, but countrywide Cannabis sales during the first two months of Organigram's fiscal third-quarter averaged $181 million per month.
The company halted the expansion of its cultivation and processing plant earlier this year and plans to produce less cannabis than its facility was built for. Organigram hasn't been specific about how far revenue fell, but any sign of slipping sales while the rest of the industry thrives isn't a good sign.
Reasons to buy
Revenue isn't the only line item that declined during the fiscal third quarter. Organigram also expects to report a significant decrease in sales, general, and administrative costs due to a 25% workforce reduction that left the company with just 609 employees.
Unlike all of its Canadian peers with U.S. stock market listings, Organigram has just one facility to manage. While it's disturbing to see the company's Moncton campus run at less than full capacity, Aurora Cannabis (NYSE: ACB) shut down five production facilities in June with the goal of becoming more centralized like Organigram.
Organigram has posted significant losses this year, but nothing near those of its larger peer. Aurora lost a whopping CA$137 million during the first three months of 2020.
Organigram finished February with CA$41 million in cash after losing around CA$8 million during the first half of the company's fiscal year. In April, Organigram added another CA$49 million to its coffers after completing an offering that raised its outstanding share count about 12% higher. With far less payroll overhead now than at the beginning of the year, there's a good chance the company's current cash balance will sustain Organigram through this period of losses and back into profitability.
Stand back
In June, Health Canada forced Organigram to stop marketing its new deep-value line of dried flower called "Trailer Park Buds" because of its relation to The Trailer Park Boys, a Canadian television show with a cult following. With limited ability to create recognizable brands, standing out among dozens of licensed producers selling nearly identical products isn't going to get any easier.
Organigram's Moncton facility produced cannabis at a cost of CA$0.75 per gram during the three months ended February. While this is an impressive feat, it also means there isn't much room to increase efficiency going forward. The company's almost making ends meet now, but pressure from dozens of competitors producing similar cannabis products could get even stronger. Right now, it's probably best to watch Organigram's story unfold from a safe distance.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | While it's disturbing to see the company's Moncton campus run at less than full capacity, Aurora Cannabis (NYSE: ACB) shut down five production facilities in June with the goal of becoming more centralized like Organigram. Organigram also expects to report a significant decrease in sales, general, and administrative costs due to a 25% workforce reduction that left the company with just 609 employees. With far less payroll overhead now than at the beginning of the year, there's a good chance the company's current cash balance will sustain Organigram through this period of losses and back into profitability. | While it's disturbing to see the company's Moncton campus run at less than full capacity, Aurora Cannabis (NYSE: ACB) shut down five production facilities in June with the goal of becoming more centralized like Organigram. During Organigram's fiscal second-quarter, cannabis store sales across Canada averaged CA$151 million per month. We don't have data from May yet, but countrywide Cannabis sales during the first two months of Organigram's fiscal third-quarter averaged $181 million per month. | While it's disturbing to see the company's Moncton campus run at less than full capacity, Aurora Cannabis (NYSE: ACB) shut down five production facilities in June with the goal of becoming more centralized like Organigram. During Organigram's fiscal second-quarter, cannabis store sales across Canada averaged CA$151 million per month. We don't have data from May yet, but countrywide Cannabis sales during the first two months of Organigram's fiscal third-quarter averaged $181 million per month. | While it's disturbing to see the company's Moncton campus run at less than full capacity, Aurora Cannabis (NYSE: ACB) shut down five production facilities in June with the goal of becoming more centralized like Organigram. Shares of the licensed cannabis producer have lost about 30% of their value this year. We don't have data from May yet, but countrywide Cannabis sales during the first two months of Organigram's fiscal third-quarter averaged $181 million per month. |
37377.0 | 2020-07-07 00:00:00 UTC | Why Aurora Cannabis Fell 12.9% in June | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-fell-12.9-in-june-2020-07-07 | nan | nan | What happened
Shares of Aurora Cannabis (NYSE: ACB) fell 12.9% in June, according to data from S&P Global Market Intelligence. The former cannabis darling has fallen on hard times to say the least, with the stock down a whopping 86% over the past year. Nevertheless, June's decline can likely be attributed to a mere correction after May's huge 59% gain following the company's March quarter earnings report, which beat expectations.
Aurora's stock drifted back down in June despite several significant announcements that could be actually be taken as positive developments.
Aurora Cannabis had its share price clipped in June. Image source: Getty Images.
So what
June was a month of retrenchment and retooling for Aurora that included asset sales and cost cuts made in order to lessen its cash burn and help its ailing balance sheet. In early June, Aurora sold off all of its 23% stake in fellow Canadian alcohol and cannabis retailer Alcanna for $27.6 million Canadian dollars ($20.4 million). Unfortunately, that seemed like desperate move, as the share sale at CA$3 was far below the CA$15 purchase price back in 2018.
The retooling continued with president and co-founder Steve Dobler announcing his retirement from the board. Later in the month, former CEO and co-founder Terry Booth joined Dobler in announcing his retirement.
In conjunction with the retirement of Aurora's old guard, the company also announced a significant restructuring plan. Aurora plans to lay off 25% of its selling, general, and administrative (SG&A) workforce and 30% of production workers, and to shutter five of its Canadian production facilities. The company also wrote down a number of assets, a move that has been widely anticipated not just for Aurora, but for many Canadian pot stocks.
Now what
Aurora's new management believes the company can achieve EBITDA profitability in the first quarter of fiscal 2021, which began July 1 and ends Sept. 30. For the recent quarter, management has projected a significant decrease in cash burn, which totaled CA$155 million in the fiscal third quarter.
Still, even if the company hits that goal, investors should be aware that EBITDA is not the same as earnings. That's especially true of a company like Aurora, which has existing production facilities that will need at least some maintenance capital expenditures, and Aurora will still have interest to pay on over CA$570 million in debt and convertible debentures. As such, Aurora remains an extremely speculative stock in an unstable industry, making it appropriate only for high-risk speculators.
10 stocks we like better than Aurora Cannabis Inc.
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Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 12.9% in June, according to data from S&P Global Market Intelligence. Nevertheless, June's decline can likely be attributed to a mere correction after May's huge 59% gain following the company's March quarter earnings report, which beat expectations. So what June was a month of retrenchment and retooling for Aurora that included asset sales and cost cuts made in order to lessen its cash burn and help its ailing balance sheet. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 12.9% in June, according to data from S&P Global Market Intelligence. Aurora's stock drifted back down in June despite several significant announcements that could be actually be taken as positive developments. For the recent quarter, management has projected a significant decrease in cash burn, which totaled CA$155 million in the fiscal third quarter. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 12.9% in June, according to data from S&P Global Market Intelligence. Aurora's stock drifted back down in June despite several significant announcements that could be actually be taken as positive developments. That's especially true of a company like Aurora, which has existing production facilities that will need at least some maintenance capital expenditures, and Aurora will still have interest to pay on over CA$570 million in debt and convertible debentures. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 12.9% in June, according to data from S&P Global Market Intelligence. Unfortunately, that seemed like desperate move, as the share sale at CA$3 was far below the CA$15 purchase price back in 2018. 10 stocks we like better than Aurora Cannabis Inc. |
37378.0 | 2020-07-06 00:00:00 UTC | 5 Popular Stocks I Wouldn't Buy With Free Money | ACB | https://www.nasdaq.com/articles/5-popular-stocks-i-wouldnt-buy-with-free-money-2020-07-06 | nan | nan | For more than four months now, Wall Street and investors have been taken on the ride of their lives. Uncertainty and panic related to the coronavirus disease 2019 (COVID-19) pandemic completely pulled the rug out from beneath the stock market and ultimately sent the benchmark S&P 500 lower by 34% in a mere 33 days. It was the fastest bear market descent in history.
But we've also witnessed one of the strongest snapback rallies in history. The recently ended quarter featured the best returns for the broad-market indexes since 1998, with the technology-focused Nasdaq Composite galloping to new all-time highs. This rally has primarily been driven by tech companies benefiting from the work-at-home trend, as well as the FAANG stocks.
However, super rallies in the stock market often spur a lot of speculative buying. Right now, there are five exceptionally popular stocks that investors can't seem to get enough of lately that, frankly, I wouldn't buy with free money.
Image source: Getty Images.
Moderna
Let's begin with COVID-19 darling Moderna (NASDAQ: MRNA), which is a clinical-stage biotech company focused on RNA-based therapeutics and vaccines.
Through this past week, Moderna's share are up 199% year-to-date, with the vast majority of these gains due to mRNA-1273, the company's investigation COVID-19 vaccine. Over the past two months, things have moved quickly for Moderna, with mRNA-1273 getting the Fast Track designation on May 11 from the U.S. Food and Drug Administration, and the company reporting positive safety and tolerance data in a phase 1 study on May 18. The plan is for a 30,000-patient phase 3 study to begin in July, with Moderna being able to supply between 500 million and 1 billion doses annually if all goes well.
Sounds great, right? Well, call me not so convinced. A clinical-stage company with a $22 billion valuation is a tough pill to swallow, especially when a fat portion of this valuation is tied to a single vaccine. Historically speaking, vaccines that chase infectious diseases with pandemic potential aren't the moneymakers you'd think. Rarely, if ever, do one or two vaccine developers dominate the landscape in a broad indication, meaning multiple drug developers are left to share the pie, so to speak. Despite being ahead of its competitors in terms of its testing timeline, expecting Moderna to run away from the competition is a foolish (with a small "f") bet.
The Nikola Badger electric truck. Image source: Nikola.
Nikola
Another absolute head-scratcher is electric truck and hydrogen fuel cell-powered truck manufacturer Nikola (NASDAQ: NKLA), which is currently sporting a $21 billion valuation (even after sliding 13% to close the previous week) despite not having any revenue.
The bull thesis for Nikola has been (pardon the pun) fueled by the meteoric rise in Tesla (NASDAQ: TSLA), which closed above $1,200 for the first time ever on July 2, and surpassed Toyota to become the world's largest automaker by market cap. Investors in this day and age are less concerned about financials and more interested in how a stodgy industry is being reimagined by electric vehicles. It also doesn't hurt that Tesla's production and charging network throughout the U.S. has been steadily growing.
But the brass tacks here is that Tesla has more cars in space at the moment than Nikola has ever sold on Earth. It's a ridiculous statement that's 100% accurate. Nikola is asking for $5,000 deposits from potential buyers for an electric truck (the Nikola Badger) that doesn't even have a prototype yet. Production for the Badger is expected to begin next year, but that assumes no production issues. If Tesla serves as a historical reminder, there will be hiccups and challenges.
Nikola's stock is priced beyond perfection, at this point, and I wouldn't buy it with free money.
Image source: Getty Images.
Aurora Cannabis
Among marijuana stocks, none is more popular with millennial investors than Aurora Cannabis (NYSE: ACB). This was a company that, at this time last year, was on track to be the leading cannabis producer in the world, and had access to approximately two dozen markets outside of Canada. But in spite of its ongoing popularity, the dream has gone up in smoke.
Since mid-March 2019, Aurora's share price is down almost 90%, which takes into account a 1-for-12 reverse stock split that saved it from being delisted off of the New York Stock Exchange. Aurora has been attempting to backpedal its way to profitability in recent quarters by closing five of its smaller facilities and halting construction on two of its largest projects (Aurora Sun in Alberta and Aurora Nordic 2 in Denmark). These drastic measures became necessary given the company's unsightly cash-burn rate and its limited access to capital, beyond issuing its own stock.
Aurora Cannabis' balance sheet is also a mess. Aside from insufficient cash and ongoing share-based dilution, I'd surmise that more than half of the company's total assets need to be impaired. This includes more than $2.4 billion Canadian in goodwill (51% of total assets), which signifies that the company grossly overpaid for most, if not all, of its acquisitions in recent years.
The pot industry has promise, but I'd avoid Aurora Cannabis like the plague.
Image source: Getty Images.
Hertz Global
Sometimes, individual stock moves cannot be explained with rational thought. That's my best explanation for the nearly 900% move higher in rental car company Hertz Global's (NYSE: HTZ) stock following its Chapter 11 bankruptcy announcement.
One possible reason for the mega-rally in Hertz was a short squeeze, with pessimists covering their downside bets at a rapid pace. It's also possible that speculators were (or perhaps still are) counting on a buyer for Hertz's business. Whatever the reason ultimately is for the rally, it makes no sense.
In case I haven't mentioned it, Hertz is bankrupt! This means there's a very good chance it'll be delisted from the New York Stock Exchange, and that nothing will be left over for the company's common stockholders. After all, Hertz had $19 billion in debt on its balance sheet when it filed for Chapter 11 bankruptcy protection, making it virtually certainty that any sort of debt restructuring and reemergence from bankruptcy will leave nothing for existing shareholders.
Even the company's 8-K filing with the Securities and Exchange Commission, when the company attempted to sell up to $500 million in common stock during the bankruptcy process, states that "there is a significant risk that the holders of our common stock... will receive no recovery under the Chapter 11 Cases and that our common stock will be worthless." Do yourself and your pocketbook a favor and keep Hertz out of your portfolio.
Image source: Getty Images.
Netflix
Finally -- and I can already hear the cries of "blasphemy" from readers -- I wouldn't buy shares of streaming content provider Netflix (NASDAQ: NFLX) with free money.
To be clear, Netflix is certainly in a different class than Moderna, Nikola, Aurora Cannabis, and Hertz. It has shown the ability to generate an adjusted profit, and has continued to pad its bountiful worldwide subscriber count. During the COVID-19-impacted first quarter, the company signed up close to 16 million new global subscribers, pushing its paid membership to almost 183 million. And it also doesn't hurt that FAANG stocks, as a whole, have been unstoppable.
So, why avoid Netflix? The big issue I've always had is the company's negative free cash flow. Netflix continues to invest very aggressively in its international expansion, and as a result has been burning through its cash on hand for more years than I can count. I won't consider investing in a company of Netflix's size if it can't generate positive recurring free cash flow.
I'm also concerned Netflix is going to face increasing amounts of streaming competition, especially with COVID-19 forcing people to stay home. A number of large content providers have launched streaming services over the past year, and this could limit Netflix's subscriber growth moving forward.
Again, Netflix is in a completely different ballpark from the previous four names. However, its inability to generate positive free cash flow is a negative that can't be overlooked.
10 stocks we like better than Netflix
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Netflix wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Among marijuana stocks, none is more popular with millennial investors than Aurora Cannabis (NYSE: ACB). Uncertainty and panic related to the coronavirus disease 2019 (COVID-19) pandemic completely pulled the rug out from beneath the stock market and ultimately sent the benchmark S&P 500 lower by 34% in a mere 33 days. Over the past two months, things have moved quickly for Moderna, with mRNA-1273 getting the Fast Track designation on May 11 from the U.S. Food and Drug Administration, and the company reporting positive safety and tolerance data in a phase 1 study on May 18. | Aurora Cannabis Among marijuana stocks, none is more popular with millennial investors than Aurora Cannabis (NYSE: ACB). Netflix Finally -- and I can already hear the cries of "blasphemy" from readers -- I wouldn't buy shares of streaming content provider Netflix (NASDAQ: NFLX) with free money. I won't consider investing in a company of Netflix's size if it can't generate positive recurring free cash flow. | Aurora Cannabis Among marijuana stocks, none is more popular with millennial investors than Aurora Cannabis (NYSE: ACB). Even the company's 8-K filing with the Securities and Exchange Commission, when the company attempted to sell up to $500 million in common stock during the bankruptcy process, states that "there is a significant risk that the holders of our common stock... will receive no recovery under the Chapter 11 Cases and that our common stock will be worthless." I won't consider investing in a company of Netflix's size if it can't generate positive recurring free cash flow. | Aurora Cannabis Among marijuana stocks, none is more popular with millennial investors than Aurora Cannabis (NYSE: ACB). Image source: Nikola. Netflix Finally -- and I can already hear the cries of "blasphemy" from readers -- I wouldn't buy shares of streaming content provider Netflix (NASDAQ: NFLX) with free money. |
37379.0 | 2020-07-04 00:00:00 UTC | Can Cannabis 2.0 Products Boost Canopy Growth and Organigram in 2020? | ACB | https://www.nasdaq.com/articles/can-cannabis-2.0-products-boost-canopy-growth-and-organigram-in-2020-2020-07-04 | nan | nan | There was a whole lot of hype after "Cannabis 2.0" happened in Canada in October 2019. It marked the second wave of recreational marijuana legalization in Canada. Cannabis 2.0 included cannabis derivatives products -- namely cannabis-infused edibles, chocolates, beverages, vapes, and concentrates -- while Cannabis 1.0 in October 2018 only legalized cannabis flowers and buds.
Image source: Getty Images.
While all marijuana companies ramped up production to grab the opportunities of this new market, Canopy Growth (NYSE: CGC) and Organigram Holdings (NASDAQ: OGI) have focused on providing the most innovative products to consumers. Surprisingly, while the COVID-19 pandemic has forced many to focus on conserving cash, these two are moving ahead with the launch of more derivatives products for this year.
A Deloitte research paper, "Nurturing New Growth," stated that the potential for Cannabis 2.0 products could be huge -- bringing in close to 2.7 billion Canadian dollars annually, with edibles worth CA$1.6 billion alone. The article stated: "Cannabis 2.0 will undoubtedly be a 'slow burn' at first, but as more products become available we're confident it will catch fire and gain momentum. Cannabis 2.0 will position Canadian companies and talent for global growth -- even as the US market gains momentum."
Organigram: First to launch Cannabis 2.0 products
Organigram marked its name as an early mover with Cannabis 2.0 products when it launched its first batch of vape cartridges, Flicker and Trailblazer Spark, in December 2019. It continued with the launch of Edison + PAX Era distillate vape cartridges in the second quarter of 2020.
In April, it announced the launch of Trailer Park Buds, a recreational use consumer brand tied up with a license agreement with the company behind the Canadian Trailer Park Boys TV show. Two strains of dried cannabis will be sold -- specifically Itodaso Indica and Two Birds Sativa.
Organigram takes pride in its years of research to develop an organic cannabis products line, ANKR Organics. The line will probably be released in select markets -- most probably by the third quarter of fiscal 2020 because of COVID-19.
In May, Organigram offered some of its Cannabis 2.0 recreational products as medical cannabis offerings. As it states, medical cannabis consumers now have access to "ready-to-use Edison Cannabis Company (Edison) vape pens powered by Feather; Edison-branded pods specifically for PAX Era vaporizers; and Edison Bytes chocolates in dark and milk chocolate, in both one and two pack formats."
Its commitment to providing consumers with high-quality products is evident from its CA$15 million investment in a high-speed, high-capacity, and fully automated chocolate manufacturing line.
The popularity of its Cannabis 2.0 products is clear from its revenue growth in the second quarter, during which the already launched products made up 13% of net revenue.
Canopy Growth continues its Cannabis 2.0 products expansion amid crisis
Canopy Growth disappointed investors with its fourth-quarter fiscal 2020 results -- especially after Aurora Cannabis, to everyone's surprise, reported a good third quarter. Canopy's Q4 revenue of CA$107.9 million missed revenue estimates by a huge margin but was up 15% year over year. Earnings before income, tax, depreciation, and amortization (EBITDA) losses of CA$102 million also came in higher than expected.
Despite a not-so-good quarter, Canopy continues with its expansion plans. With Constellation Brands backing it, the company looks ready to survive the current COVID-19 crisis -- while continuing to make long-term growth plans. This puts Canopy in a safe spot compared to its peers.
Canopy's products are pleasing consumers
On May 12, the company announced an update on the rollout of its new cannabis-infused beverages, chocolates, and vape products over the coming months. For starters, it shipped its ready-to-drink cannabis-infused beverages -- Tweed Houndstooth & Soda and Tweed Bakerstreet & Ginger -- in March and April. These one-of-a-kind drinks are the first tetrahydrocannabinol (THC)-infused ready-to-drink beverages introduced to Canadian cannabis consumers. They have garnered some positive customer reviews, and management expects cannabis beverages to be a "game-changer" for the industry.
The market was be introduced to two additional beverages -- Houseplant Grapefruit and Deep Space -- in May and June.
Consumers have been gobbling up Canopy's four premium THC-infused chocolate bars -- namely Tokyo Smoke Pause, Tokyo Smoke Go, Tweed Houndstooth & Mocha, and Tweed Bakerstreet & Peppermint -- launched in early 2020. Some innovative vape products also began to be sold at the start of 2020 -- Tokyo Smoke Luma, JUJU Power, Tweed Houndstooth, Tweed Bakerstreet, and Tweed Indica -- with Tweed Sativa to soon enter the market.
Two strong players in the cannabis space
Recently, Canopy Growth amended its acquisition deal with Acreage Holdings. Canopy's CEO believes U.S. legalization may occur in 2022, and this deal will help Canopy spread its roots in the U.S. and capture a huge chunk of market share. The amendment reflected the struggles of the cannabis industry, which has affected most pot stocks' performance in June. Shares of Canopy Growth, Acreage, and Organigram fell by 1.9%, 17.7%, and 14.2%, respectively, in June, while the SPDR S&P 500 saw slight gains of 0.92%.
Looking at their interesting and innovative product portfolios, strong balance sheets, and expansion plans, I have no reason to doubt that Canopy Growth and Organigram will prove to be beneficial stocks when the cannabis industry finally thrives.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Its commitment to providing consumers with high-quality products is evident from its CA$15 million investment in a high-speed, high-capacity, and fully automated chocolate manufacturing line. Looking at their interesting and innovative product portfolios, strong balance sheets, and expansion plans, I have no reason to doubt that Canopy Growth and Organigram will prove to be beneficial stocks when the cannabis industry finally thrives. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | Cannabis 2.0 included cannabis derivatives products -- namely cannabis-infused edibles, chocolates, beverages, vapes, and concentrates -- while Cannabis 1.0 in October 2018 only legalized cannabis flowers and buds. Canopy Growth continues its Cannabis 2.0 products expansion amid crisis Canopy Growth disappointed investors with its fourth-quarter fiscal 2020 results -- especially after Aurora Cannabis, to everyone's surprise, reported a good third quarter. Some innovative vape products also began to be sold at the start of 2020 -- Tokyo Smoke Luma, JUJU Power, Tweed Houndstooth, Tweed Bakerstreet, and Tweed Indica -- with Tweed Sativa to soon enter the market. | Cannabis 2.0 included cannabis derivatives products -- namely cannabis-infused edibles, chocolates, beverages, vapes, and concentrates -- while Cannabis 1.0 in October 2018 only legalized cannabis flowers and buds. Organigram: First to launch Cannabis 2.0 products Organigram marked its name as an early mover with Cannabis 2.0 products when it launched its first batch of vape cartridges, Flicker and Trailblazer Spark, in December 2019. Canopy Growth continues its Cannabis 2.0 products expansion amid crisis Canopy Growth disappointed investors with its fourth-quarter fiscal 2020 results -- especially after Aurora Cannabis, to everyone's surprise, reported a good third quarter. | Cannabis 2.0 will position Canadian companies and talent for global growth -- even as the US market gains momentum." Canopy's products are pleasing consumers On May 12, the company announced an update on the rollout of its new cannabis-infused beverages, chocolates, and vape products over the coming months. Two strong players in the cannabis space Recently, Canopy Growth amended its acquisition deal with Acreage Holdings. |
37380.0 | 2020-07-01 00:00:00 UTC | 3 Reasons to Buy Canopy Growth Instead of Aurora Cannabis | ACB | https://www.nasdaq.com/articles/3-reasons-to-buy-canopy-growth-instead-of-aurora-cannabis-2020-07-01 | nan | nan | Year to date, shares of the two largest companies in the cannabis sector, Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), have not been performing well. Issues with oversupply in Canada aside, the two companies are also contending with a devastating pandemic that shut down businesses due to government restrictions and wreaked havoc on the economy.
Since the beginning of the year, Canopy Growth stock has declined by more than 20%, while Aurora's stock has fallen by as much as 50%. With their valuations becoming cheaper and cheaper, however, investors are wondering which company is better to buy on the dip. Let's find out together.
Image Source: Getty Images.
Revenue and production capacity
In fiscal year 2020, Canopy Growth generated more than $399 million in net revenue, representing a growth of 76% compared with last year. The company had an adjusted gross margin of 42% in the fourth quarter of 2020. Moreover, Canopy Growth harvested more than 137,000 kilograms of cannabis during the same period, compared with 46,927 kilograms last year.
While the company's production capacity increased, the average selling prices for its products were also respectable. Canopy Growth's selling price ranges from $5.65 per gram for recreational cannabis to $48.04 per gram for international medical cannabis.
However, Aurora's products were much more constrained in terms of selling prices, ranging from CA$4.33 to CA$8.12 depending on selection. While the company was slightly more profitable with 54% adjusted gross margins, it only brought in CA$207 million in revenue nine months into fiscal year 2020. Aurora's 39% growth was about half of what Canopy achieved last year.
Also, the company's production capacity was lower, with 46,927 kilograms of dried cannabis harvested in the past nine months. Besides lower production capacity and revenue, Aurora Cannabis has another issue that makes it a less attractive buy.
Goodwill
Goodwill is the premium a buyer pays over an acquired company's book value. When the acquired company's business operations are materially impacted, such as by an event like COVID-19, its goodwill value must be written off, leading to huge net losses for the buyer.
During Aurora's acquisition spree, it gathered more than CA$2.415 billion in goodwill, which is more than half of its CA$4.718 billion in net assets. Unfortunately, a large portion of its shareholders' equity is supported by goodwill, making it vulnerable to write-offs.
Canopy Growth largely does not suffer from this problem. Even though the company's goodwill amounts to $1.954 billion, it has $6.857 billion in total assets and $4.886 billion in total shareholder's equity. Hence, Canopy Growth offers much more cushion for shareholders should it see negative effects on its business.
Financial health
Currently, Canopy Growth has more than $1.88 billion in cash and short-term investments. Meanwhile, the company's major liabilities amount to $449 million in long-term debt and $322.5 million in dilutive warrants. When combined, Canopy Growth is in great financial health, as it has more than $1 billion in net cash left over to offset potential losses from operations.
Aurora, however, is not so fortunate. While the company has more than CA$230 million in cash and CA$11.8 million in short-term investments, it records CA$292.8 million in long-term convertible debt and CA$246.2 million in long-term loans and borrowings. Additionally, Aurora will be liable for more than CA$30 million in current convertible debt and CA$21 million in current borrowings. Combined, the company does not have enough cash to offset its debt and will need to raise further stock offerings that dilute shareholders to offset business losses.
A much better option for investors
Currently, Canopy Growth has a market capitalization of $5.9 billion compared to full-year sales of $399 million, yielding a price-to-sales ratio of 15. Meanwhile, Aurora has a market capitalization of $1.4 billion and is generating CA$275 million in revenues at an annual run rate, yielding a price-to-sales ratio of 7. While Aurora Cannabis may seem like the cheaper option, Canopy has much more financial stability and is thus a better buy.
Although the two companies' net losses for fiscal year 2020 are comparable at about $1.4 billion (annualized for Aurora), , Canopy has much more cash on its balance to survive shortfalls. When it comes to net loss and overall metrics, Canopy Growth has the upper hand. Hence, I think investors would see their portfolios perform much better should they choose Canopy Growth over Aurora for the time being.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Zhiyuan Sun owns shares of Canopy Growth. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Year to date, shares of the two largest companies in the cannabis sector, Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), have not been performing well. Issues with oversupply in Canada aside, the two companies are also contending with a devastating pandemic that shut down businesses due to government restrictions and wreaked havoc on the economy. When combined, Canopy Growth is in great financial health, as it has more than $1 billion in net cash left over to offset potential losses from operations. | Year to date, shares of the two largest companies in the cannabis sector, Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), have not been performing well. Revenue and production capacity In fiscal year 2020, Canopy Growth generated more than $399 million in net revenue, representing a growth of 76% compared with last year. Even though the company's goodwill amounts to $1.954 billion, it has $6.857 billion in total assets and $4.886 billion in total shareholder's equity. | Year to date, shares of the two largest companies in the cannabis sector, Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), have not been performing well. Revenue and production capacity In fiscal year 2020, Canopy Growth generated more than $399 million in net revenue, representing a growth of 76% compared with last year. While the company has more than CA$230 million in cash and CA$11.8 million in short-term investments, it records CA$292.8 million in long-term convertible debt and CA$246.2 million in long-term loans and borrowings. | Year to date, shares of the two largest companies in the cannabis sector, Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), have not been performing well. Since the beginning of the year, Canopy Growth stock has declined by more than 20%, while Aurora's stock has fallen by as much as 50%. Revenue and production capacity In fiscal year 2020, Canopy Growth generated more than $399 million in net revenue, representing a growth of 76% compared with last year. |
37381.0 | 2020-06-30 00:00:00 UTC | Aurora Cannabis Co-Founder and ex-CEO Retires From Board of Directors | ACB | https://www.nasdaq.com/articles/aurora-cannabis-co-founder-and-ex-ceo-retires-from-board-of-directors-2020-07-01 | nan | nan | A page in Aurora Cannabis's (NYSE: ACB) history is turning. The company announced that co-founder and former CEO Terry Booth relinquished his seat on the board of directors effective this past Friday.
Aurora did not provide a reason for Booth's departure, nor has he made any public statements on the matter. It was not specified what he plans to do after stepping away from the company. His move comes less than two weeks after another co-founder and board member, Steve Dobler, did the same.
In the press release announcing the transition, Aurora heaped praise on Booth, saying that "[h]e helped set the table for the company to lead in Canada and globally, and we continue to execute our plan to do so profitably."
Image source: Getty Images.
The company hasn't generally been profitable in the past. In numerous instances, it has disappointed its investors with worse-than-expected losses and/or top-line growth. Earlier this year, Aurora posted a net loss equivalent to nearly $1 billion in the second quarter of fiscal 2020.
Although marijuana businesses have held up better than companies in other corners of the economy during the coronavirus pandemic, they are struggling with difficult conditions within their industry.
Marijuana laws in the potentially huge U.S. market are a patchwork, with only a handful of states fully permitting both recreational and medical forms of the drug. In some states, taxation is excessive, driving would-be customers into the arms of the black market. Cannabis companies are effectively prohibited by law from using even the most basic banking and financial services.
Aurora's stock inched up by 0.5% on Tuesday, lagging behind the top equity indexes' gains on the day.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | A page in Aurora Cannabis's (NYSE: ACB) history is turning. The company announced that co-founder and former CEO Terry Booth relinquished his seat on the board of directors effective this past Friday. In the press release announcing the transition, Aurora heaped praise on Booth, saying that "[h]e helped set the table for the company to lead in Canada and globally, and we continue to execute our plan to do so profitably." | A page in Aurora Cannabis's (NYSE: ACB) history is turning. The company announced that co-founder and former CEO Terry Booth relinquished his seat on the board of directors effective this past Friday. Cannabis companies are effectively prohibited by law from using even the most basic banking and financial services. | A page in Aurora Cannabis's (NYSE: ACB) history is turning. In the press release announcing the transition, Aurora heaped praise on Booth, saying that "[h]e helped set the table for the company to lead in Canada and globally, and we continue to execute our plan to do so profitably." Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | A page in Aurora Cannabis's (NYSE: ACB) history is turning. The company announced that co-founder and former CEO Terry Booth relinquished his seat on the board of directors effective this past Friday. Marijuana laws in the potentially huge U.S. market are a patchwork, with only a handful of states fully permitting both recreational and medical forms of the drug. |
37382.0 | 2020-06-30 00:00:00 UTC | 3 Cannabis Stocks to Avoid Like the Plague for the Second Half of 2020 | ACB | https://www.nasdaq.com/articles/3-cannabis-stocks-to-avoid-like-the-plague-for-the-second-half-of-2020-2020-06-30 | nan | nan | For much of the past half-decade, cannabis stocks have been among the hottest investments on Wall Street. With Canada becoming the first industrialized country in the modern era to green light adult-use cannabis, and two-thirds of U.S. states legalizing weed in some capacity, the door appeared to be wide open for pot stocks to thrive and snag the tens of billions of dollars in cannabis sales conducted in the black market each year.
However, sentiment shifted in a big way beginning in April 2019. Over the trailing 15-month period, most marijuana stocks have lost in excess of 50% of their value. Persistent regulatory-based supply issues throughout Canada, high U.S. tax rates on legal products, and financing concerns, have weighed on pot stock investors.
While there's no question that this is an industry that's here to stay (which means there will be winners), there are a trio of cannabis stocks that investors would be wise to avoid like the plague for the second half of 2020.
Image source: Getty Images.
Aurora Cannabis
The first marijuana stock you'd be wise to keep your distance from the remainder of the year is Alberta's Aurora Cannabis (NYSE: ACB). Aurora happens to be the most popular pot stock among millennial investors, despite the fact that it's lost nearly 90% since mid-March 2019.
Like most Canadian pot stocks, Aurora is backpedaling after overshooting in the capacity expansion department. Following a halt in construction on two of its largest projects, and the more recently announced closure of five smaller production facilities, the company looks to be on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the fiscal first quarter of 2021 (ended Sept. 30, 2020), as required by its debt covenant. While this does represent a step in the right direction for Aurora, a number of issues are still left to be dealt with.
For example, Aurora Cannabis' balance sheet remains a mess. Having not landed an equity investor, Aurora has relied on issuing its common stock to fund day-to-day activities and make acquisitions. Even accounting for the 1-for-12 reverse split enacted on May 11 to avoid delisting from the New York Stock Exchange, the company's share count has exploded from approximately 1.3 million shares six years ago to what I suspect is around 113 million shares after the recently completed Reliva deal. With a $350 million at-the-market offering at its disposal, Aurora continues to show little regard in the value-creation department for its shareholders.
Additionally, Aurora's total assets are a problem. A recently announced inventory charge of up to $140 million Canadian is a start given the company's rapidly rising inventory levels, but there's much more to do. The company's remaining facilities are likely overvalued on the company's balance sheet, and its CA$2.42 billion in goodwill is highly unlikely to be recouped. Sweeping asset writedowns are needed.
The fact is that cost-cutting isn't a long-term growth strategy. Though Aurora has taken some of the steps necessary to rebuild shareholders' trust, it has a long way to go before it becomes worthy of investment.
Image source: Getty Images.
Cronos Group
Another exceptionally popular cannabis stock you're going to want to bypass owning in the second half of 2020 is Cronos Group (NASDAQ: CRON).
Interestingly, Cronos is one of only a select few Canadian pot stocks that's not having cash concerns. It landed an equity investment from tobacco giant Altria Group that closed last year. The deal gave Altria a 45% stake in Cronos Group, with Cronos landing $1.8 billion (that's U.S.) in cash. It was good timing, too, as Cronos has only around $25 million in the quarter prior to the closing of the deal.
Unfortunately, cash alone doesn't make a cannabis stock worth buying. In fact, Cronos' cash has been dwindling at an alarming rate. Last year, Cronos acquired Redwood Holdings for $300 million, of which roughly $225 million was in cash. This brought the Lord Jones brand of cannabidiol (CBD) beauty products into Cronos' product portfolio. However, CBD sales in the U.S. have underwhelmed due to the U.S. Food and Drug Administration putting its foot down on CBD as an additive to food and beverages. As a result, Cronos' cash position has now dwindled to $1.33 billion from $1.8 billion in a year.
Perhaps more concerning is the fact that the company's sales have been inexcusably small for a company with a market cap and cash pile its size. Aside from the Lord Jones brand failing to pay dividends, Cronos' core production facility, Peace Naturals, is only capable of 40,000 kilos of output a year. Canada's slow adult-use ramp-up, compounded with Cronos Group's pedestrian output, has the company generating less than CA$9 million in sales per quarter.
Investors also can't overlook the numerous issues tied to the vape industry. Altria was expected to help Cronos Group become a dominant vape player. However, a vape-health scare in the U.S. last summer, supply issues tied to the coronavirus disease (COVID-19) pandemic this year, and select Canadian provinces banning vape sales pending further safety review, have stymied Cronos' plans to dominate this high-margin market.
Image source: Getty Images.
HEXO
Finally, cannabis stock investors are strongly urged to avoid Quebec-based HEXO (NYSE: HEXO) for the second half of 2020, if not beyond.
Similar to Aurora Cannabis, HEXO is in the midst of a massive cost-cutting campaign that's designed to drastically reduce its operating expenses and move the company toward profitability. HEXO is attempting to accomplish this by halting production at select facilities and reducing staff. While this is a smart move given the state of marijuana demand in Canada, it's by no means a business-saving maneuver for the company.
The first thing you need to know about HEXO is that it's operating as a going concern, at least according to its quarterly filings with SEDAR in Canada. Companies that are labeled as going concerns typically don't have the capital on hand to cover their expenses over the coming 12 months. This is why we've seen HEXO pare back its spending and sell the Niagara facility for a meager CA$10.25 million.
To build on this point, HEXO's primary means of raising capital at the moment is to sell its common stock. The company's at-the-market offerings are continuing to balloon its share count and dilute what remaining value its shares have left. It's also not helping HEXO's case to remain listed on the New York Stock Exchange. With the exception of three trading sessions over the trailing three-month period, HEXO has closed below the $1 minimum threshold for continued listing on the NYSE.
But the most damning evidence of all might come from CEO Sebastien St-Louis, who in October 2019 commented that the company would need to secure 20% market share in Canada to become profitable. That's a seemingly impossible task given that the company is simply trying to reduce its costs enough to survive at this point.
Keep HEXO out of your portfolio for the foreseeable future.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis The first marijuana stock you'd be wise to keep your distance from the remainder of the year is Alberta's Aurora Cannabis (NYSE: ACB). Persistent regulatory-based supply issues throughout Canada, high U.S. tax rates on legal products, and financing concerns, have weighed on pot stock investors. Following a halt in construction on two of its largest projects, and the more recently announced closure of five smaller production facilities, the company looks to be on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the fiscal first quarter of 2021 (ended Sept. 30, 2020), as required by its debt covenant. | Aurora Cannabis The first marijuana stock you'd be wise to keep your distance from the remainder of the year is Alberta's Aurora Cannabis (NYSE: ACB). Persistent regulatory-based supply issues throughout Canada, high U.S. tax rates on legal products, and financing concerns, have weighed on pot stock investors. Even accounting for the 1-for-12 reverse split enacted on May 11 to avoid delisting from the New York Stock Exchange, the company's share count has exploded from approximately 1.3 million shares six years ago to what I suspect is around 113 million shares after the recently completed Reliva deal. | Aurora Cannabis The first marijuana stock you'd be wise to keep your distance from the remainder of the year is Alberta's Aurora Cannabis (NYSE: ACB). With Canada becoming the first industrialized country in the modern era to green light adult-use cannabis, and two-thirds of U.S. states legalizing weed in some capacity, the door appeared to be wide open for pot stocks to thrive and snag the tens of billions of dollars in cannabis sales conducted in the black market each year. Even accounting for the 1-for-12 reverse split enacted on May 11 to avoid delisting from the New York Stock Exchange, the company's share count has exploded from approximately 1.3 million shares six years ago to what I suspect is around 113 million shares after the recently completed Reliva deal. | Aurora Cannabis The first marijuana stock you'd be wise to keep your distance from the remainder of the year is Alberta's Aurora Cannabis (NYSE: ACB). Interestingly, Cronos is one of only a select few Canadian pot stocks that's not having cash concerns. Canada's slow adult-use ramp-up, compounded with Cronos Group's pedestrian output, has the company generating less than CA$9 million in sales per quarter. |
37383.0 | 2020-06-30 00:00:00 UTC | Buy Canopy Growth Stock Before Positive Momentum Returns | ACB | https://www.nasdaq.com/articles/buy-canopy-growth-stock-before-positive-momentum-returns-2020-06-30 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Last year wasn’t a good year for pot stocks. The first half of 2020 hasn’t been the best, either. But the recent poor performance in the space shouldn’t keep you away from opportunities with Canopy Growth (NYSE:CGC) stock.
Source: Shutterstock
Why? Multiple reasons. Firstly, a strong balance sheet, courtesy of its largest investor, Constellation Brands (NYSE:STZ). The beverage giant’s backing provides enough capital to survive and thrive. Meanwhile, rivals like Aurora Cannabis (NYSE:ACB) scramble to keep the lights on.
Secondly, a solid management team. With the right leadership in the C-suite, Canopy stands the best chance among its peers.
You | Meanwhile, rivals like Aurora Cannabis (NYSE:ACB) scramble to keep the lights on. But the recent poor performance in the space shouldn’t keep you away from opportunities with Canopy Growth (NYSE:CGC) stock. Firstly, a strong balance sheet, courtesy of its largest investor, Constellation Brands (NYSE:STZ). | Meanwhile, rivals like Aurora Cannabis (NYSE:ACB) scramble to keep the lights on. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Last year wasn’t a good year for pot stocks. The first half of 2020 hasn’t been the best, either. | Meanwhile, rivals like Aurora Cannabis (NYSE:ACB) scramble to keep the lights on. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Last year wasn’t a good year for pot stocks. But the recent poor performance in the space shouldn’t keep you away from opportunities with Canopy Growth (NYSE:CGC) stock. | Meanwhile, rivals like Aurora Cannabis (NYSE:ACB) scramble to keep the lights on. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Last year wasn’t a good year for pot stocks. The first half of 2020 hasn’t been the best, either. |
37384.0 | 2020-06-30 00:00:00 UTC | Are Good Times Coming for Aurora Cannabis? | ACB | https://www.nasdaq.com/articles/are-good-times-coming-for-aurora-cannabis-2020-06-30 | nan | nan | Once a favorite marijuana stock, Edmonton, Alberta-based Aurora Cannabis (NYSE: ACB) saw its worst days in 2019, with declining revenues, negative profitability, and a sinking leadership team eventually pushing its stock to the verge of being delisted. Its share price fell below $1, which is against the trading compliance of the New York Stock Exchange; it only saved itself via a reverse stock split.
This year, that stock split and its better-than-expected third-quarter results seem to be helping Aurora make a lot of noise.
Image Source: Getty Images.
Working its way up
Aurora marked its entry into the U.S. cannabidiol (CBD) market by acquiring hemp-derived CBD company Reliva in May. Aurora's entry could give Canopy Growth (NYSE: CGC) tough competition in the U.S. CBD market; the latter company has already launched various cannabis-infused beverages with the help of its partnership with Constellation Brands.
Aurora saw 16% year-over-year revenue growth to 75.5 million Canadian dollars in its third quarter, much to everyone's surprise. Both consumer cannabis revenue and medical cannabis revenue showed startling sequential growth.
Despite impressing investors with those numbers, Aurora failed to achieve positive earnings before interest, tax, depreciation, and amortization (EBITDA) in the third quarter. That said, during the third-quarterearnings call management assured investors that they were working to reduce selling, general, and administrative (SG&A) expenses and hit positive EBITDA by the first quarter of 2021.
Cost-cutting measures to hit profitability
To gain investors' confidence and show how serious they are about hitting their targets, Aurora announced some operational changes on June 23.
Cutting the workforce is never good news.; usually, it's the last resort a company can take to save costs. But given the state of affairs at Aurora, management made the difficult decision to drop 25% of SG&A staff effective immediately, as well as about 30% of production staff over the next two quarters.
Aurora also made some restructuring changes at the executive leadership level, including the retirement of president Steve Dobler. These changes will help it achieve an SG&A run rate of CA$42 million by the first quarter of 2021, which management hopes will support higher levels of revenue in the future.
Aurora also plans to close five of its small-scale facilities over the next two quarters -- namely Aurora Prairie (in Saskatchewan), Aurora Mountain (in Alberta), Aurora Ridge (in Ontario), and Aurora Vie and Aurora Eau (both in Quebec). It also intends to consolidate its Canadian production and manufacturing at the Aurora Sky and Aurora Polaris (both in Alberta), Aurora River (in Ontario), and Whistler Pemberton (in British Columbia) facilities by the second quarter of 2020. To meet European demand, Aurora will ramp up cannabis production at its Nordic facility in Europe.
These facility changes could cost Aurora -- asset impairment charges related to production could total up to CA$60 million and inventory writedown charges could reach CA$140 million in the fourth quarter of 2020. Aurora hopes to see enhanced gross margins thanks to these measures.
Management seemed hopeful, saying in a press release, "We believe that we now have the right balance for the long-term success of Aurora -- market leadership, financial discipline, operational excellence, and strong execution. We remain focused on making Aurora a profitable and robust global cannabinoid company."
Aurora's bold move has certainly impressed analysts, many of whom have upgraded the stock and increased its target price.
Will the efforts pay off?
A reverse stock split typically gives a stock a quick bounce from short-term gains, but the happy days usually end quickly. In Aurora's case, though, a string of positive news appears to be benefiting the stock. It has risen 78.1% since its split on May 11, while the Horizons Marijuana Life Sciences ETF -- the benchmark marijuana index -- has risen by 13.9% in the same period.
Last month's Reliva acquisition looked like a bold move for a company that is burdened with debt, the product of its reckless decisions during an acquisition spree last year. That said, the U.S. CBD space will be a growing market once the U.S. Food and Drug Administration (FDA) grants further approvals. With more states legalizing marijuana and expectations rising for legalization on the federal level, a deal with Reliva -- which captures a huge chunk of the market with 20,000 retail stores -- might bear fruit for Aurora.
We will know more about whether Aurora's strategies are paying off when it reports its fourth-quarter fiscal 2020 results in September. Meanwhile, investors should proceed with caution when it comes to this cannabis stock.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Once a favorite marijuana stock, Edmonton, Alberta-based Aurora Cannabis (NYSE: ACB) saw its worst days in 2019, with declining revenues, negative profitability, and a sinking leadership team eventually pushing its stock to the verge of being delisted. Aurora's entry could give Canopy Growth (NYSE: CGC) tough competition in the U.S. CBD market; the latter company has already launched various cannabis-infused beverages with the help of its partnership with Constellation Brands. That said, during the third-quarterearnings call management assured investors that they were working to reduce selling, general, and administrative (SG&A) expenses and hit positive EBITDA by the first quarter of 2021. | Once a favorite marijuana stock, Edmonton, Alberta-based Aurora Cannabis (NYSE: ACB) saw its worst days in 2019, with declining revenues, negative profitability, and a sinking leadership team eventually pushing its stock to the verge of being delisted. Both consumer cannabis revenue and medical cannabis revenue showed startling sequential growth. Cost-cutting measures to hit profitability To gain investors' confidence and show how serious they are about hitting their targets, Aurora announced some operational changes on June 23. | Once a favorite marijuana stock, Edmonton, Alberta-based Aurora Cannabis (NYSE: ACB) saw its worst days in 2019, with declining revenues, negative profitability, and a sinking leadership team eventually pushing its stock to the verge of being delisted. Aurora also plans to close five of its small-scale facilities over the next two quarters -- namely Aurora Prairie (in Saskatchewan), Aurora Mountain (in Alberta), Aurora Ridge (in Ontario), and Aurora Vie and Aurora Eau (both in Quebec). It also intends to consolidate its Canadian production and manufacturing at the Aurora Sky and Aurora Polaris (both in Alberta), Aurora River (in Ontario), and Whistler Pemberton (in British Columbia) facilities by the second quarter of 2020. | Once a favorite marijuana stock, Edmonton, Alberta-based Aurora Cannabis (NYSE: ACB) saw its worst days in 2019, with declining revenues, negative profitability, and a sinking leadership team eventually pushing its stock to the verge of being delisted. Its share price fell below $1, which is against the trading compliance of the New York Stock Exchange; it only saved itself via a reverse stock split. That said, during the third-quarterearnings call management assured investors that they were working to reduce selling, general, and administrative (SG&A) expenses and hit positive EBITDA by the first quarter of 2021. |
37385.0 | 2020-06-29 00:00:00 UTC | TSX edges higher on energy gains | ACB | https://www.nasdaq.com/articles/tsx-edges-higher-on-energy-gains-2020-06-29 | nan | nan | June 29 (Reuters) - Canada's main stock index gained on Monday as energy stocks were lifted by higher oil prices, but worries over the growing number of deaths due to the coronavirus limited gains.
* The death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally, a grim milestone for the global pandemic that seems to be resurgent in some countries even as other regions are still grappling with the first wave. * The energy sector .SPTTEN climbed 0.5%, helped by gains in oil prices. O/R
* At 9:45 a.m. ET (13:45 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 12.44 points, or 0.08%, at 15,201.42.
* Domestic data showed that producer prices in Canada rose by 1.2% in May from April on higher prices for meat, fish, and dairy products, as well as energy and petroleum products.
* The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, added 0.2% as gold futures GCc1 rose 0.2% to $1,777.2 an ounce.GOL/
* The largest percentage gainers on the TSX were Ballard Power Systems Inc BLDP.TO, which jumped 7.1%, and Transcontinental Inc TCLa.TO, which rose 2.1%.
* On the TSX, 109 issues were higher, while 107 issues declined for a 1.02-to-1 ratio favouring gainers, with 19.50 million shares traded.
* Aurora Cannabis Inc fell 3.9%, the most on the TSX, after its co-founder Terry Booth retired from his role as director. The second biggest decliner was Lightspeed POS Inc , down 3.3%.
* The most heavily traded shares by volume were Bank of Nova Scotia , Freegold Ventures Limited and Canadian Imperial Bank of Commerce .
* The TSX posted three new 52-week highs and no new low.
* Across all Canadian issues there were 16 new 52-week highs and four new lows, with total volume of 39.34 million shares.
(Reporting by Shivani Kumaresan in Bengaluru; Editing by Amy Caren Daniel)
((Shivani.Kumaresan@thomsonreuters.com ; +1 646 223 8780))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * The death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally, a grim milestone for the global pandemic that seems to be resurgent in some countries even as other regions are still grappling with the first wave. * The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, added 0.2% as gold futures GCc1 rose 0.2% to $1,777.2 an ounce.GOL/ * The largest percentage gainers on the TSX were Ballard Power Systems Inc BLDP.TO, which jumped 7.1%, and Transcontinental Inc TCLa.TO, which rose 2.1%. * Aurora Cannabis Inc fell 3.9%, the most on the TSX, after its co-founder Terry Booth retired from his role as director. | June 29 (Reuters) - Canada's main stock index gained on Monday as energy stocks were lifted by higher oil prices, but worries over the growing number of deaths due to the coronavirus limited gains. * On the TSX, 109 issues were higher, while 107 issues declined for a 1.02-to-1 ratio favouring gainers, with 19.50 million shares traded. * Across all Canadian issues there were 16 new 52-week highs and four new lows, with total volume of 39.34 million shares. | June 29 (Reuters) - Canada's main stock index gained on Monday as energy stocks were lifted by higher oil prices, but worries over the growing number of deaths due to the coronavirus limited gains. * Domestic data showed that producer prices in Canada rose by 1.2% in May from April on higher prices for meat, fish, and dairy products, as well as energy and petroleum products. * On the TSX, 109 issues were higher, while 107 issues declined for a 1.02-to-1 ratio favouring gainers, with 19.50 million shares traded. | June 29 (Reuters) - Canada's main stock index gained on Monday as energy stocks were lifted by higher oil prices, but worries over the growing number of deaths due to the coronavirus limited gains. * On the TSX, 109 issues were higher, while 107 issues declined for a 1.02-to-1 ratio favouring gainers, with 19.50 million shares traded. * Across all Canadian issues there were 16 new 52-week highs and four new lows, with total volume of 39.34 million shares. |
37386.0 | 2020-06-27 00:00:00 UTC | Are Cannabis Stocks Recession-Proof? | ACB | https://www.nasdaq.com/articles/are-cannabis-stocks-recession-proof-2020-06-27 | nan | nan | Cannabis stocks are in for their first big test -- a recession. In the early stages of the COVID-19 pandemic, things were looking good for the cannabis industry as people were stockpiling essentials, including pot.
But let's take a look at how the industry's done since then and whether investing in pot stocks can be a safe way to protect your portfolio during a recession.
What the numbers tell us
To start, let's look at the Canadian cannabis market, the only legal one in North America. In March, adult-use cannabis sales in Canada totaled 181.1 million Canadian dollars. That was a sizable 19% jump from CA$151.9 million in February. In April, however, there was a slight decline, with sales falling to CA$180.1 million. It's not unheard of for pot sales to decline somewhat from month to month, and at first glance, the numbers do look pretty steady where they are.
Image source: Getty Images.
In the U.S. markets, the numbers have continued to show strength even as millions of Americans are losing their jobs. In Illinois, May was a record month for the new recreational pot market. Sales of $44.3 million were a new high for the industry. Previously, the sales record was $39 million in January. That was also the first month the recreational market opened for business in Illinois. The state's also on track to hit a record for medical marijuana sales this year.
Oregon was another state that had a stellar month in May as its cannabidiol (CBD) sales hit the $100 million mark for the first time ever. The state has permitted cannabis sales since 2015, and May was the third month in a row in which it posted record results for CBD. In Oklahoma, medical marijuana sales also reached all-time highs of over $73 million in May.
During the early stages of the recession, in several markets, there still seems to be strong demand for cannabis. Whether it's medical, recreational, in Canada, or in the U.S., there's a good cross-section of data suggesting that, at least for now, the cannabis industry's looking stable amid this recession.
Why sales growth alone isn't enough to make pot stocks safe
Although sales are rising in many markets, that doesn't mean cannabis stocks are recession-proof. Even if sales are likely to remain stable amid the economic downturn, pot stocks themselves are still extremely volatile.
When Aurora Cannabis (NYSE: ACB) released its third-quarter results on May 14, the stock got a big boost in share price as investors were encouraged by the pot producer's improved quarter. Aurora had a smaller loss than in the previous quarter, and its sales were also up.
But year to date, the stock's still down around 50%, and it's continued to fall during the past month. Here's how it's done against both the Horizon Marijuana Life Sciences ETF (OTC: HMLSF) and the S&P 500:
ACB data by YCharts
The reason for the volatility is simple: Pot stocks aren't stable or consistent. When you think of recession-proof stocks, you probably think of utility stocks or businesses that have recurring sources of revenue that will be there even if there's a recession. But Aurora's been anything but stable.
The Alberta-based cannabis producer has recorded an operating loss in each of its last 10 quarters, and its sales have fluctuated between $CA56 million and CA$99 million during just the past four reporting periods.
Without stability, pot stocks attract many speculators and short-term investors who can create volatility. But as cannabis companies mature and develop more sustainable businesses over the long term, investing in marijuana will become a lot safer, perhaps even recession-proof.
Key takeaway for investors
At a high level, you can argue that the industry is showing resiliency amid the pandemic and that it has the potential to be recession-proof. But that doesn't mean the underlying stocks are, at least not yet.
Given the financial challenges many cannabis companies are facing today, they're nowhere near recession-proof. And they could even be dangerous investments to hold during a downturn, especially as investors turn to safer, more stable stocks during a recession.
It could take years before pot stocks solidify their financials and become more stable investments to hold on to.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | When Aurora Cannabis (NYSE: ACB) released its third-quarter results on May 14, the stock got a big boost in share price as investors were encouraged by the pot producer's improved quarter. Here's how it's done against both the Horizon Marijuana Life Sciences ETF (OTC: HMLSF) and the S&P 500: ACB data by YCharts The reason for the volatility is simple: Pot stocks aren't stable or consistent. Key takeaway for investors At a high level, you can argue that the industry is showing resiliency amid the pandemic and that it has the potential to be recession-proof. | When Aurora Cannabis (NYSE: ACB) released its third-quarter results on May 14, the stock got a big boost in share price as investors were encouraged by the pot producer's improved quarter. Here's how it's done against both the Horizon Marijuana Life Sciences ETF (OTC: HMLSF) and the S&P 500: ACB data by YCharts The reason for the volatility is simple: Pot stocks aren't stable or consistent. What the numbers tell us To start, let's look at the Canadian cannabis market, the only legal one in North America. | When Aurora Cannabis (NYSE: ACB) released its third-quarter results on May 14, the stock got a big boost in share price as investors were encouraged by the pot producer's improved quarter. Here's how it's done against both the Horizon Marijuana Life Sciences ETF (OTC: HMLSF) and the S&P 500: ACB data by YCharts The reason for the volatility is simple: Pot stocks aren't stable or consistent. Why sales growth alone isn't enough to make pot stocks safe Although sales are rising in many markets, that doesn't mean cannabis stocks are recession-proof. | When Aurora Cannabis (NYSE: ACB) released its third-quarter results on May 14, the stock got a big boost in share price as investors were encouraged by the pot producer's improved quarter. Here's how it's done against both the Horizon Marijuana Life Sciences ETF (OTC: HMLSF) and the S&P 500: ACB data by YCharts The reason for the volatility is simple: Pot stocks aren't stable or consistent. In Illinois, May was a record month for the new recreational pot market. |
37387.0 | 2020-06-26 00:00:00 UTC | Aurora Cannabis' $1.94 Billion Mistake Just Got Worse | ACB | https://www.nasdaq.com/articles/aurora-cannabis-%241.94-billion-mistake-just-got-worse-2020-06-26 | nan | nan | Investing in the cannabis industry has been quite the adventure over the past couple of years. Through March 2019, buying almost any brand-name pot stock would have yielded a triple-digit or quadruple-digit gain for investors. But over the trailing 15 months, the vast majority of these gains have been wiped away, with most marijuana stocks losing anywhere from 50% to 90% of their value.
While few pot stocks have been spared, the Canadian marijuana industry has been hit particularly hard. Canada bungled its chance to become a global cannabis leader, and licensed producers to our north have paid the biggest price. Perhaps none more so than Aurora Cannabis (NYSE: ACB).
Image source: Getty Images.
Aurora tries to backpedal to profitability
At this time last year, Aurora Cannabis was still widely viewed as the kingpin of marijuana. Although it didn't have Canopy Growth's cash pile, it had 15 production facilities that, if fully operational, could produce more than 650,000 kilos of cannabis a year.
Aurora was also slated to have a production, export, research, or partnership presence in two dozen countries outside of Canada. With domestic markets expected to peak at an estimated 800,000 kilos a year, Aurora was counting on export demand from these foreign markets (especially in Europe) to gobble up its excess production.
But a quick glance at Aurora's stock chart shows that things did not go as expected. Regulatory issues at the federal and provincial level led to all sorts of supply bottlenecks throughout Canada, and the kingpin of cannabis found itself overextended well beyond its capacity needs. As a result, Aurora Cannabis has been cutting costs at an extraordinary pace to conserve cash and push toward profitability.
Last year, the most popular pot stock halted construction on two of its largest production facilities and laid off 500 workers. Then, this past week, the company announced plans to close five of its smaller production facilities (Aurora Vie, Aurora Eau, Aurora Prairie, Aurora Mountain, and Aurora Ridge).
Though these moves have resulted in a number of one-time charges, management now believes the company is on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fiscal first quarter of 2021, as required by its new debt covenant.
Image source: Getty Images.
This affirmation that Aurora Cannabis appears to be on track to meet its selling, general, and administrative (SG&A) cost guidance of $40 million to $45 million Canadian per quarter ($29.3 million to $33 million) was enough to nab the company an upgrade from Wall Street investment bank Stifel. And upgrades have been hard to come by for the company.
In other words, Aurora is attempting to backpedal its way into the profit column.
Aurora's worst deal ever just got even uglier
While some stringent cost-cutting was going to be necessary at Aurora to halt its enormous cash burn, no one was quite sure how management would trim the fat. The closure of five production facilities proved to be the answer. But as one problem appears resolved (i.e., reducing SG&A expenses in an effort to generate positive adjusted EBITDA), another is magnified.
You see, between 2016 and 2019, Aurora Cannabis primarily grew on an inorganic basis. This is to say, it made more than one dozen acquisitions, with the crème de la crème being the CA$2.64 billion deal (that's $1.94 billion U.S.) to buy licensed producer MedReleaf. Not counting equity investments, it's still the largest completed deal in cannabis history.
The MedReleaf buyout was expected to be a game changer. Aurora would absorb MedReleaf's unique brands, as well as its Markham, Bradford, and Exeter facilities. Markham and Bradford were already complete and producing at 7,000 kilos and 28,000 kilos, respectively, of annual capacity. Meanwhile, Exeter needed to be retrofit for cannabis production. Once complete, Exeter was forecast to yield 105,000 kilos annually, for a grand total of 140,000 kilos from the deal.
Image source: Getty Images.
However, since this $1.94 billion all-share deal was closed in July 2018, Aurora sold the Exeter greenhouse for a meager CA$8.6 million ($6.3 million) after failing to retrofit the facility. And it announced this week that Aurora Ridge (the new name of the Markham facility) would be permanently closed. This means that of the touted 140,000 kilos of peak annual output from the MedReleaf deal, only Aurora River (the new name of the Bradford facility) with its 28,000 kilos of annual output over 210,000 square feet remains.
To put this in another context, even after subtracting the token $6.3 million Aurora raised by selling Exeter, it paid about $1.93 billion for 28,000 kilos of annual production capacity, a handful of unique medical marijuana brands, and CA$328 million in net assets (around $240 million) that were on MedReleaf's books as of June 2018, a month before the deal closed. Today, entire companies capable of 28,000 kilos of output can be scooped up for less than $50 million.
With the understanding that some of MedReleaf's $240 million in net assets are no longer being utilized or have been sold off, the $1.93 billion MedReleaf deal might have a real value of $200 million to $300 million, in my view. With goodwill already accounting for 51% of the company's total assets, this would represent a massive future writedown for Aurora, but one that management would have to consider taking sooner rather than later if it wants to regain the trust of shareholders.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). Regulatory issues at the federal and provincial level led to all sorts of supply bottlenecks throughout Canada, and the kingpin of cannabis found itself overextended well beyond its capacity needs. Though these moves have resulted in a number of one-time charges, management now believes the company is on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fiscal first quarter of 2021, as required by its new debt covenant. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). This affirmation that Aurora Cannabis appears to be on track to meet its selling, general, and administrative (SG&A) cost guidance of $40 million to $45 million Canadian per quarter ($29.3 million to $33 million) was enough to nab the company an upgrade from Wall Street investment bank Stifel. This is to say, it made more than one dozen acquisitions, with the crème de la crème being the CA$2.64 billion deal (that's $1.94 billion U.S.) to buy licensed producer MedReleaf. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). Then, this past week, the company announced plans to close five of its smaller production facilities (Aurora Vie, Aurora Eau, Aurora Prairie, Aurora Mountain, and Aurora Ridge). This affirmation that Aurora Cannabis appears to be on track to meet its selling, general, and administrative (SG&A) cost guidance of $40 million to $45 million Canadian per quarter ($29.3 million to $33 million) was enough to nab the company an upgrade from Wall Street investment bank Stifel. | Perhaps none more so than Aurora Cannabis (NYSE: ACB). While few pot stocks have been spared, the Canadian marijuana industry has been hit particularly hard. Aurora tries to backpedal to profitability At this time last year, Aurora Cannabis was still widely viewed as the kingpin of marijuana. |
37388.0 | 2020-06-25 00:00:00 UTC | TSX rises 0.99% to 15,446.14 | ACB | https://www.nasdaq.com/articles/tsx-rises-0.99-to-15446.14-2020-06-25 | nan | nan | * The Toronto Stock Exchange's TSX rises 0.99 percent to 15,446.14
* Leading the index were Real Matters Inc , up 4.3%, Ivanhoe Mines Ltd IVN.TO, up 3.8%, and Parex Resources Inc PXT.TO, higher by 3.7%.
* Lagging shares were Canfor Corp CFP.TO, down 4.2%, Aurora Cannabis Inc ACB.TO, down 3.7%, and Labrador Iron Ore Royalty Corp LIF.TO, lower by 3.7%.
* On the TSX 147 issues rose and 72 fell as a 2-to-1 ratio favored advancers. There was 1 new high and no new lows, with total volume of 195.8 million shares.
* The most heavily traded shares by volume were Suncor Energy Inc SU.TO, Canadian Natural Resources Ltd CNQ.TO and Tc Energy Corp TRP.TO.
* The TSX's energy group .SPTTEN rose 0.40 points, or 0.5%, while the financials sector .SPTTFS climbed 2.62 points, or 1.0%.
* West Texas Intermediate crude futures CLc1 rose 2.71%, or $1.03, to $39.04 a barrel. Brent crude LCOc1 rose 2.98%, or $1.2, to $41.51 O/R
* The TSX is off 9.5% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Canfor Corp CFP.TO, down 4.2%, Aurora Cannabis Inc ACB.TO, down 3.7%, and Labrador Iron Ore Royalty Corp LIF.TO, lower by 3.7%. * The Toronto Stock Exchange's TSX rises 0.99 percent to 15,446.14 * Leading the index were Real Matters Inc , up 4.3%, Ivanhoe Mines Ltd IVN.TO, up 3.8%, and Parex Resources Inc PXT.TO, higher by 3.7%. * On the TSX 147 issues rose and 72 fell as a 2-to-1 ratio favored advancers. | * Lagging shares were Canfor Corp CFP.TO, down 4.2%, Aurora Cannabis Inc ACB.TO, down 3.7%, and Labrador Iron Ore Royalty Corp LIF.TO, lower by 3.7%. * The most heavily traded shares by volume were Suncor Energy Inc SU.TO, Canadian Natural Resources Ltd CNQ.TO and Tc Energy Corp TRP.TO. * The TSX's energy group .SPTTEN rose 0.40 points, or 0.5%, while the financials sector .SPTTFS climbed 2.62 points, or 1.0%. | * Lagging shares were Canfor Corp CFP.TO, down 4.2%, Aurora Cannabis Inc ACB.TO, down 3.7%, and Labrador Iron Ore Royalty Corp LIF.TO, lower by 3.7%. * The most heavily traded shares by volume were Suncor Energy Inc SU.TO, Canadian Natural Resources Ltd CNQ.TO and Tc Energy Corp TRP.TO. * The TSX's energy group .SPTTEN rose 0.40 points, or 0.5%, while the financials sector .SPTTFS climbed 2.62 points, or 1.0%. | * Lagging shares were Canfor Corp CFP.TO, down 4.2%, Aurora Cannabis Inc ACB.TO, down 3.7%, and Labrador Iron Ore Royalty Corp LIF.TO, lower by 3.7%. * The Toronto Stock Exchange's TSX rises 0.99 percent to 15,446.14 * Leading the index were Real Matters Inc , up 4.3%, Ivanhoe Mines Ltd IVN.TO, up 3.8%, and Parex Resources Inc PXT.TO, higher by 3.7%. * On the TSX 147 issues rose and 72 fell as a 2-to-1 ratio favored advancers. |
37389.0 | 2020-06-25 00:00:00 UTC | Expect Big Asset Writedowns From Canadian Pot Stocks in the Coming Quarters | ACB | https://www.nasdaq.com/articles/expect-big-asset-writedowns-from-canadian-pot-stocks-in-the-coming-quarters-2020-06-25 | nan | nan | When 2019 began, hopes were high within the investment community that cannabis stocks would remain unstoppable and blaze a path to profitability. This seemed a feasible expectation given that Canada had recently legalized adult-use marijuana, and numerous U.S. states appeared to be moving toward medical and/or recreational legalization.
But it wasn't meant to be.
Image source: Getty Images.
Canadian pot stocks have been a huge disappointment -- and things could get worse
Since the beginning of April 2019, pot stocks have been in a relatively precipitous decline marked by a host of regulatory issues. In the U.S., high tax rates on legal product in select states (ahem, California) have made it challenging for licensed producers to compete with the black market. Meanwhile, in Canada, supply issues have kept legal weed from reaching consumers.
But between the two markets, Canada has, unquestionably, been the bigger disappointment. We're talking about the first industrialized country to legalize recreational marijuana in the modern era completely dropping the ball on its chance to be a global cannabis leader. As a result, most Canadian pot stocks have shed anywhere from 50% to 90% of their value since the beginning of April 2019.
The unfortunate thing is that Canada's woes aren't over. In the months to come, there's a growing likelihood that we're going to witness a number of prominent Canadian pot stocks take large asset writedowns to reflect these industry struggles.
Canadian pot stock goodwill is a ticking time bomb
The most prominent issue with Canadian marijuana stocks, at least with regard to possible asset writedowns, is the goodwill they're lugging around on their balance sheets.
Goodwill is the premium paid above and beyond tangible and intangible assets that a purchasing business hopes to recoup over time. While some amount of goodwill is normal when making an acquisition -- that is, paying a premium is typical to coerce a buyout -- what cannabis stocks are carrying around appears unsustainably high.
For example, Aurora Cannabis (NYSE: ACB) had, at one time, in excess of 3 billion Canadian dollars in goodwill on its balance sheet. This was derived from making more than a dozen acquisitions since August 2016 and, in many instances, grossly overpaying for these deals. In fact, the CA$2.64 billion MedReleaf buyout is the most overpriced deal of all time, in my view, with CA$2 billion being classified as goodwill.
Image source: Getty Images.
Even after writing down CA$762.2 million in goodwill during the fiscal second quarter, Aurora is still carrying CA$2.42 billion of goodwill on its balance sheet, totaling 51% of its assets. Put in another context, more than half of Aurora's total assets are built on the hope of one day recouping what it overpaid for more than a dozen businesses.
Keep in mind that this isn't just a problem exclusive to Aurora Cannabis. Most Canadian marijuana stocks are carrying far too much goodwill on their balance sheets. Canopy Growth (NYSE: CGC), the largest pot stock by market cap, ended fiscal 2020 with CA$1.95 billion in goodwill, up from CA$1.49 billion at the end of fiscal 2019. Unfortunately, with Canopy's cash pile shrinking, its total assets declined by CA$1.7 billion year over year. The result is that Canopy's goodwill now accounts for almost 29% of its total assets.
Property and inventory writedowns could surprise folks
The worry I have for Canadian pot stock investors is that they might be blindsided by other asset writedowns in calendar year 2020 that they never saw coming. In addition to goodwill, impairments to inventory and property and to plants and equipment might await a number of popular Canadian marijuana stocks.
Generally speaking, having a healthy level of inventory is a good thing. Available inventory is necessary to fulfill wholesale agreements and meet heightened demand when necessary.
However, inventory levels for licensed producers in Canada have gotten out of control. Aggregate cannabis production far outweighs consumer demand, which for licensed producers has meant a significant surge in the dollar amount held in inventory. With few avenues to move this excess inventory, growers might be forced to significantly discount it, or perhaps even destroy it, just to get it off the books.
On a trailing-year basis, through March 31, 2020, Canopy Growth's inventory levels more than doubled to CA$391.1 million from CA$190.1 million, while Aurora Cannabis has seen its inventory more than triple to CA$251.2 million from CA$82.7 million.
Image source: Getty Images.
The valuations of property, plants, and equipment might also need some fine-tuning. Recently, Aurora Cannabis fire-sold its 1-million-square-foot Exeter greenhouse for a mere CA$8.6 million. Even though Exeter was never retrofit for cannabis production, this represents just a third of the CA$26 million MedReleaf paid when it purchased Exeter and 164 acres of land in 2018.
Likewise, Quebec-based HEXO (NYSE: HEXO) announced a week ago that it had sold its Niagara facility for CA$10.25 million. The Niagara facility was acquired when HEXO purchased Newstrike Brands in an all-share deal that was worth CA$263 million when it was announced in March 2019. But in an effort to reduce its expenses and align its production with prevailing demand, HEXO shuttered Niagara and has now sold the property. It should be noted that HEXO has already taken sizable writedowns tied to its Newstrike Brands deal.
The point is that these assets were sold for a fraction of what they were once believed to be worth, and there's a very good chance that Canadian pot stocks haven't adjusted the value of their existing hard assets to reflect these more tempered greenhouse valuations.
In my view, very big asset writedowns await Canadian marijuana stocks in the coming quarters.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | For example, Aurora Cannabis (NYSE: ACB) had, at one time, in excess of 3 billion Canadian dollars in goodwill on its balance sheet. In the U.S., high tax rates on legal product in select states (ahem, California) have made it challenging for licensed producers to compete with the black market. In the months to come, there's a growing likelihood that we're going to witness a number of prominent Canadian pot stocks take large asset writedowns to reflect these industry struggles. | For example, Aurora Cannabis (NYSE: ACB) had, at one time, in excess of 3 billion Canadian dollars in goodwill on its balance sheet. Even after writing down CA$762.2 million in goodwill during the fiscal second quarter, Aurora is still carrying CA$2.42 billion of goodwill on its balance sheet, totaling 51% of its assets. Canopy Growth (NYSE: CGC), the largest pot stock by market cap, ended fiscal 2020 with CA$1.95 billion in goodwill, up from CA$1.49 billion at the end of fiscal 2019. | For example, Aurora Cannabis (NYSE: ACB) had, at one time, in excess of 3 billion Canadian dollars in goodwill on its balance sheet. Canadian pot stock goodwill is a ticking time bomb The most prominent issue with Canadian marijuana stocks, at least with regard to possible asset writedowns, is the goodwill they're lugging around on their balance sheets. Even after writing down CA$762.2 million in goodwill during the fiscal second quarter, Aurora is still carrying CA$2.42 billion of goodwill on its balance sheet, totaling 51% of its assets. | For example, Aurora Cannabis (NYSE: ACB) had, at one time, in excess of 3 billion Canadian dollars in goodwill on its balance sheet. Canadian pot stock goodwill is a ticking time bomb The most prominent issue with Canadian marijuana stocks, at least with regard to possible asset writedowns, is the goodwill they're lugging around on their balance sheets. Even after writing down CA$762.2 million in goodwill during the fiscal second quarter, Aurora is still carrying CA$2.42 billion of goodwill on its balance sheet, totaling 51% of its assets. |
37390.0 | 2020-06-24 00:00:00 UTC | Aurora Cannabis Is Doing Something Exceptionally Rare Right Now | ACB | https://www.nasdaq.com/articles/aurora-cannabis-is-doing-something-exceptionally-rare-right-now-2020-06-24 | nan | nan | When the first quarter of 2019 came to a close, the cannabis industry looked to be unstoppable. Wall Street's sales expectations for the industry were soaring, especially with Canada having legalized recreational pot and numerous U.S. states considering medical or adult-use legalization. But these "high hopes" soon faded.
Since April 2019, only the oil and gas industry has been a larger disappointment to the investment world than marijuana stocks. Canada's sales growth has been stymied by regulatory-based supply problems, while U.S. weed companies have struggled under the weight of high taxation. Over the past 14-plus months, most pot stocks have lost anywhere from 50% to 90% of their value.
Perhaps no marijuana company has been a bigger disappointment to investors than Aurora Cannabis (NYSE: ACB).
Image source: Getty Images.
Aurora Cannabis has failed to live up to the hype
Aurora, which is a favorite among millennial investors, was widely expected to lead the world in legal weed production. At this time last year, it had 15 properties that, if fully developed and operational, could yield north of 650,000 kilos of marijuana per year.
Aurora also had a production, export, clinical research, or partnership presence in two dozen countries outside of Canada. This international presence was viewed as a key differentiating factor for Aurora that was expected to insulate it from supply problems in Canada.
Today, however, Aurora is somewhat of a shell of its former self. The company has halted construction on two of its largest projects (Aurora Nordic 2 in Denmark and Aurora Sun in Alberta) and sold its 1-million-square-foot Exeter greenhouse, which was never retrofit from vegetable production to grow cannabis. In total, Aurora's peak annual output has been slashed by more than 400,000 kilos, at least for now.
Likewise, the company's overseas assets haven't paid dividends. Aurora has struggled to generate more than $4 million Canadian to CA$5 million in quarterly sales from international markets, which is nothing more than a drop in the bucket considering its annual run-rate output of around 150,000 kilos of cannabis per year.
Image source: Getty Images.
Aurora is among some very rare company at the moment
All of these struggles pushed Aurora's share price down by more than 90% from its mid-March 2019 high and led management to declare a 1-for-12 reverse split, which was effected on May 11, 2020. This split became necessary to get Aurora's share price safely back above $1 per share and avoid delisting from the New York Stock Exchange.
Although a reverse split -- or any traditional split for that matter – doesn't involve a change in market cap, there's certainly a negative connotation associated with reverse splits. Historically speaking, the vast majority of companies that enact a reverse split tend to see their share prices decline even more. According to data from Credit Suisse's equity derivative strategy group, for nearly every year between 1980 and 2009, the median return in the month following a reverse stock split was negative.
However, Aurora Cannabis is bucking convention in its first month following a reverse split. After reporting its fiscal third-quarter operating results, which were widely viewed by Wall Street to be better than expected, Aurora Cannabis' share price more than doubled. Now a full six weeks after its reverse split, Aurora Cannabis' share price has gained 66%.
Significant gains following a reverse split are very rare. For example, travel website Booking Holdings, which you might remember best as Priceline.com, enacted a 1-for-6 reverse split in June 2003, sending its share price from a little over $4 to $25. Today, a single share of Booking goes for $1,627, representing a 64-fold increase in value since its reverse split.
Brand-name companies such as American International Group and Citigroup have also increased in value following a reverse split. But, again, it's rare. That's what makes Aurora Cannabis' strong move higher something exceptional, at least for the time being.
Image source: Getty Images.
The important thing to remember about Aurora Cannabis
But there's something that Aurora's shareholders and prospective investors need to understand about reverse splits. Though they consolidate a company's outstanding shares and increase its share price (thusly have no effect on market cap), a reverse split doesn't wave a wand and make operational issues disappear. In other words, the issues that were plaguing Aurora Cannabis prior to enacting a reverse split are liable to remain in place afterwards.
For example, Aurora's reverse split may have saved the company from being delisted, but it doesn't change the narrative that the company's balance sheet is a mess. Aurora continues to lean on at-the-market stock offerings to raise capital, which means its outstanding share count keeps rising. Following its split, the company's share count has skyrocketed from about 1.3 million shares in June 2014 to probably 113 million, following the all-share Reliva acquisition last month. The constant need for capital raises means ongoing dilution for shareholders.
Aurora Cannabis is also lugging around a mountain of goodwill and a growing amount of inventory. I've opined that more than half of Aurora's assets may eventually need to be written down, and a reverse split isn't going to mask that possibility.
Beyond its balance sheet, Aurora still needs to find a way to effectively grow its international business, as well as manage its costs after overextending itself on the capacity front.
In short, Aurora may be in rare company now following its reverse split, but the narrative hasn't changed.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Perhaps no marijuana company has been a bigger disappointment to investors than Aurora Cannabis (NYSE: ACB). Canada's sales growth has been stymied by regulatory-based supply problems, while U.S. weed companies have struggled under the weight of high taxation. According to data from Credit Suisse's equity derivative strategy group, for nearly every year between 1980 and 2009, the median return in the month following a reverse stock split was negative. | Perhaps no marijuana company has been a bigger disappointment to investors than Aurora Cannabis (NYSE: ACB). After reporting its fiscal third-quarter operating results, which were widely viewed by Wall Street to be better than expected, Aurora Cannabis' share price more than doubled. Now a full six weeks after its reverse split, Aurora Cannabis' share price has gained 66%. | Perhaps no marijuana company has been a bigger disappointment to investors than Aurora Cannabis (NYSE: ACB). Aurora is among some very rare company at the moment All of these struggles pushed Aurora's share price down by more than 90% from its mid-March 2019 high and led management to declare a 1-for-12 reverse split, which was effected on May 11, 2020. Now a full six weeks after its reverse split, Aurora Cannabis' share price has gained 66%. | Perhaps no marijuana company has been a bigger disappointment to investors than Aurora Cannabis (NYSE: ACB). Aurora is among some very rare company at the moment All of these struggles pushed Aurora's share price down by more than 90% from its mid-March 2019 high and led management to declare a 1-for-12 reverse split, which was effected on May 11, 2020. Now a full six weeks after its reverse split, Aurora Cannabis' share price has gained 66%. |
37391.0 | 2020-06-24 00:00:00 UTC | Aurora Cannabis To Close Five Facilities, Cut Jobs | ACB | https://www.nasdaq.com/articles/aurora-cannabis-to-close-five-facilities-cut-jobs-2020-06-24 | nan | nan | (RTTNews) - Canadian cannabis company Aurora Cannabis said Tuesday it has initiated a plan to close five smaller production facilities over the next two quarters in order to focus production and manufacturing at the company's larger scale sites.
The company will also cut jobs at the corporate and production level as well as reduce third-party consulting and professional spending across the organization.
The job cuts include a nearly 25 percent reduction in Aurora's SG&A staff, most with immediate effect, and an approximate 30 percent reduction in production staff over the next two quarters.
Aurora Cannabis noted that its corporate headcount rationalization was undertaken at all levels, including a restructuring of the executive leadership team and the recently announced retirement of President Steve Dobler.
The company said it will close the five smaller scale facilities at Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. However, it expects that part of the Aurora Vie facility in Quebec will remain operational to allow for the manufacturing of certain higher margin products.
By the end of the fiscal second quarter of 2021, Aurora Cannabis intends to consolidate its Canadian production and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler Pemberton, and Polaris.
The company has previously said that it scaled back the Aurora Sun production facility to six grow bays and will allow for efficient scale production on an as-needed basis as market demand grows.
As part of the transition, Aurora Cannabis plans to immediately ramp up cannabis production at its Nordic facility in Europe from which it expects to adequately service the European market with EU-GMP certified product.
In connection with the reorganization, Aurora Cannabis expects to record production asset impairment charges of up to C$60 million in the fourth quarter of 2020. The company also expects to record a charge of up to C$140 million in the carrying value of certain inventory.
The company said it anticipates the production facility closures will be accretive to its gross margin.
In May, Aurora Cannabis announced its entry into the lucrative U.S. cannabis market with its acquisition of Massachusetts-based Reliva LLC, a seller of hemp-derived cannabidiol or CBD products.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis noted that its corporate headcount rationalization was undertaken at all levels, including a restructuring of the executive leadership team and the recently announced retirement of President Steve Dobler. However, it expects that part of the Aurora Vie facility in Quebec will remain operational to allow for the manufacturing of certain higher margin products. In connection with the reorganization, Aurora Cannabis expects to record production asset impairment charges of up to C$60 million in the fourth quarter of 2020. | (RTTNews) - Canadian cannabis company Aurora Cannabis said Tuesday it has initiated a plan to close five smaller production facilities over the next two quarters in order to focus production and manufacturing at the company's larger scale sites. The company said it will close the five smaller scale facilities at Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. By the end of the fiscal second quarter of 2021, Aurora Cannabis intends to consolidate its Canadian production and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler Pemberton, and Polaris. | (RTTNews) - Canadian cannabis company Aurora Cannabis said Tuesday it has initiated a plan to close five smaller production facilities over the next two quarters in order to focus production and manufacturing at the company's larger scale sites. The company said it will close the five smaller scale facilities at Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. By the end of the fiscal second quarter of 2021, Aurora Cannabis intends to consolidate its Canadian production and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler Pemberton, and Polaris. | The company will also cut jobs at the corporate and production level as well as reduce third-party consulting and professional spending across the organization. The company said it will close the five smaller scale facilities at Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. However, it expects that part of the Aurora Vie facility in Quebec will remain operational to allow for the manufacturing of certain higher margin products. |
37392.0 | 2020-06-24 00:00:00 UTC | TSX drops on worries over fresh virus wave, rising oil stocks | ACB | https://www.nasdaq.com/articles/tsx-drops-on-worries-over-fresh-virus-wave-rising-oil-stocks-2020-06-24 | nan | nan | June 24 (Reuters) - Canada's main stock index retreated on Wednesday, led by energy shares, as worries about another wave of coronavirus infections and record-high oil inventories weighed on the prices of the commodity.
* The rising number of coronavirus cases in the United States, China, Latin America and India has raised concerns among investors that it could derail the global economic recovery.
* The energy sector .SPTTEN dropped 2.1% as U.S. crude CLc1 prices were down 1.4% a barrel, while Brent crude LCOc1 lost 1.5%. O/R
* At 9:46 a.m. ET (13:46 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 101.42 points, or 0.65%, at 15,463.33.
* The financials sector .SPTTFS slipped 1%, while the industrials sector .GSPTTIN fell 0.7%.
* The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, added 0.5% as gold futures GCc1 fell 0.1% to $1,770.8 an ounce. GOL/
* On the TSX, 41 issues were higher, while 177 issues declined for a 4.32-to-1 ratio to the downside, with 18.04 million shares traded.
* The largest percentage gainers on the TSX were Aurora Cannabis Inc , which jumped 3.5% after a Stifel upgrade and Torex Gold Resources Inc , which rose 2.4% after TD Securities started coverage with a "buy" rating and C$30 target price.
* First Quantum Minerals Ltd <FM.TO>, which fell by 3.9%, and Crescent Point Energy Corp <CPG.TO>, which shed 3.8%, were the biggest drags on the index.
* The most heavily-traded shares by volume were Bonavista Energy Corp , down 14.3%, Bombardier Inc , down 2.2% and Baytex Energy Corp , down 3%.
* The TSX posted no new 52-week highs and no new lows.
* Across all Canadian issues, there were six new 52-week highs and three new lows, with a total trading volume of 40.29 million shares.
(Reporting by Amal S in Bengaluru; Editing by Ramakrishnan M.)
((Amal.S@thomsonreuters.com; within U.S.+1 646 223 8780; outside U.S. +91 80 6749 3677;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | June 24 (Reuters) - Canada's main stock index retreated on Wednesday, led by energy shares, as worries about another wave of coronavirus infections and record-high oil inventories weighed on the prices of the commodity. * The rising number of coronavirus cases in the United States, China, Latin America and India has raised concerns among investors that it could derail the global economic recovery. * The largest percentage gainers on the TSX were Aurora Cannabis Inc , which jumped 3.5% after a Stifel upgrade and Torex Gold Resources Inc , which rose 2.4% after TD Securities started coverage with a "buy" rating and C$30 target price. | * The energy sector .SPTTEN dropped 2.1% as U.S. crude CLc1 prices were down 1.4% a barrel, while Brent crude LCOc1 lost 1.5%. GOL/ * On the TSX, 41 issues were higher, while 177 issues declined for a 4.32-to-1 ratio to the downside, with 18.04 million shares traded. * Across all Canadian issues, there were six new 52-week highs and three new lows, with a total trading volume of 40.29 million shares. | June 24 (Reuters) - Canada's main stock index retreated on Wednesday, led by energy shares, as worries about another wave of coronavirus infections and record-high oil inventories weighed on the prices of the commodity. * First Quantum Minerals Ltd <FM.TO>, which fell by 3.9%, and Crescent Point Energy Corp <CPG.TO>, which shed 3.8%, were the biggest drags on the index. * The most heavily-traded shares by volume were Bonavista Energy Corp , down 14.3%, Bombardier Inc , down 2.2% and Baytex Energy Corp , down 3%. | * The financials sector .SPTTFS slipped 1%, while the industrials sector .GSPTTIN fell 0.7%. * First Quantum Minerals Ltd <FM.TO>, which fell by 3.9%, and Crescent Point Energy Corp <CPG.TO>, which shed 3.8%, were the biggest drags on the index. * Across all Canadian issues, there were six new 52-week highs and three new lows, with a total trading volume of 40.29 million shares. |
37393.0 | 2020-06-23 00:00:00 UTC | BUZZ-U.S. STOCKS ON THE MOVE-Yeti Holdings, Aurora Cannabis, Visa Inc | ACB | https://www.nasdaq.com/articles/buzz-u.s.-stocks-on-the-move-yeti-holdings-aurora-cannabis-visa-inc-2020-06-23 | nan | nan | Eikon search string for individual stock moves: STXBZ
The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi
The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh
Wall Street's three major indexes rose on Tuesday as improving economic data and the prospect of more stimulus bolstered hopes of a swift recovery, while a jump in technology shares powered the Nasdaq to another record high. .N
At 13:30 ET, the Dow Jones Industrial Average .DJI was up 1.04% at 26,294.56. The S&P 500 .SPX was up 1.04% at 3,150.35 and the Nasdaq Composite .IXIC was up 1.54% at 10,211.606. The top three S&P 500 .PG.INX percentage gainers: ** Mohawk Industries Inc , up 10% ** Sysco Corp , up 6.1% ** Darden Restaurants Inc , up 4.9% The top three S&P 500 .PL.INX percentage losers: ** American Airlines Group , down 7.1% ** United Airlines Holding , down 3.5% ** L3harris Tchnologies Inc , down 2.3% The top three NYSE .PG.N percentage gainers: ** China Rapid Finance , up 43.3% ** Caledonia Mining Corp , up 30.6% ** Dynagas LNG Partners , up 20% The top three NYSE .PL.N percentage losers: ** Spirit Aerosystems Holding , down 14.1% ** American Shared Hospital Services , down 13.7% ** Milestone Scientific Inc , down 11.6% The top three Nasdaq .PG.O percentage gainers: ** Fuwei Films Holding , up 41.2% ** Translte Bio Inc , up 36.2% ** Cyclern Therapeutics , up 35.8% The top three Nasdaq .PL.O percentage losers: ** Kirklands Inc , down 25.9% ** Nemaura Medical , down 21.7% ** 9F Inc , down 18.4% ** Nike NKE.N: up 2.6%
BUZZ-More PT raises ahead of results ** Recon Tech RCON.O: up 1.6%
BUZZ-Up on MoU with Chinese water purification firm ** W&T Offshore WTI.N: up 1.8%
BUZZ-Rises as Q1 profit beats on higher production ** ON Semiconductor ON.O: up 3.8%
BUZZ-Piper Sandler sees significant recovery in 2021, upgrades ** Apple Inc AAPL.O: up 3.3%
BUZZ-Apple: Up as brokerages raise iPhone shipment estimates, PT ** Translate Bio TBIO.O: up 36.2%
BUZZ-Eyes record open on vaccine expansion deal with Sanofi ** Fuwei Films FFHL.O: up 41.2%
BUZZ-Surges as co swings to Q1 profit ** Spirit Aerosystems SPR.N: down 14.2%
BUZZ-Falls as Berenberg downgrades on Boeing's lower demand outlook ** Immunomedics Inc IMMU.O: up 1.1%
BUZZ-Guggenheim picks Pfizer, Merck, Lilly among likely buyers ** Barnwell Industries Inc BRN.A: up 70.0%
BUZZ-Soars as quarterly loss narrows ** Beyond Meat BYND.O: down 3.5%
BUZZ-Down after Starbucks picks Impossible Foods for summer menu ** American Airlines AAL.O: down 7.1%
BUZZ-Descends after $2 bln haul from upsized stock, convertible deals ** FedEx Corp FDX.N: up 1.3%
BUZZ-BMO Capital expects Q4 to mark cyclical bottom for FedEx; raises PT ** Inovio Pharmaceuticals INO.O: up 34.8%
BUZZ-Rises on $71 mln U.S. DoD grant for COVID-19 vaccine device ** Floor & Decor FND.N: up 2.2%
BUZZ-Berenberg initiates with 'buy', cites co as compelling investment ** Luckin Coffee LK.O: down 15.4%
BUZZ-Falls as coffee chain gets another de-listing notice ** Myovant Sciences MYOV.N: up 11.1%
BUZZ-Up on positive data for endometriosis treatment ** Grocery Outlet GO.O: up 8.8%
BUZZ-Jumps as set to join S&P MidCap 400 ** Sherwin-Williams SHW.N: up 0.2%
BUZZ-Brokerages raise PT after sales forecast hike ** Sunesis Pharma SNSS.O: down 39.7%
BUZZ-Plunges on stopping lead cancer drug development ** World Wrestling Entertainment Inc WWE.N: up 0.9%
BUZZ-Needham raises PT as lockdown couch potatoes push viewership ** Broadway Financial BYFC.O: down 17.3%
BUZZ-Key investor dissolves stake ** Air Products & Chemicals APD.N: up 1.4%
BUZZ-Margins, growth to drive PT higher ** Canadian Solar CSIQ.O: up 4.1%
BUZZ-Rises on two power purchase deals in Brazil ** Ideanomics IDEX.O: down 11.4%
BUZZ-Falls on plans of up to $250 mln mixed-shelf offering ** PG&E Corp PCG.N: up 0.1%
BUZZ-Lifts as co launches $5-bln-plus equity raise to fund bankruptcy emergence ** Palatin Technologies PTN.A: up 25.1%
BUZZ-Jumps as drugmaker says developing potential COVID-19 treatment ** Workhorse Group Inc WKHS.O: up 19.8%
BUZZ-Gallops to over 3-yr high as its delivery vans clear safety tests ** CorEnergy Infrastructure CORR.N: down 11.6%
BUZZ-Falls on prelim. Q1 loss, flags charge in Q2 ** Aurora Cannabis ACB.N: up 1.2%
BUZZ-Rises after announcing job cuts, restructuring ** IHS Markit INFO.N: up 0.3%
BUZZ-Up on Q2 profit beat ** Altice USA ATUS.N: up 1.6%
BUZZ-Rises as Altice Europe disconnects ** Yeti Holdings YETI.N: up 8.3%
BUZZ-Yeti Holdings: Piper Sandler raises PT citing strong demand for co's outdoor products ** Visa Inc V.N: up 2.5%
BUZZ-U.S. payment processors: Oppenheimer picks Visa over Mastercard
The 11 major S&P 500 sectors:
Communication Services
.SPLRCL
up 1.48%
Consumer Discretionary
.SPLRCD
up 1.49%
Consumer Staples
.SPLRCS
up 0.61%
Energy
.SPNY
up 1.02%
Financial
.SPSY
up 0.89%
Health
.SPXHC
up 1.02%
Industrial
.SPLRCI
up 0.45%
Information Technology
.SPLRCT
up 1.73%
Materials
.SPLRCM
up 1.00%
Real Estate
.SPLRCR
down 0.19%
Utilities
.SPLRCU
down 0.84%
(Compiled by Shivani Kumaresan in Bengaluru)
((Shivani.Kumaresan@thomsonreuters.com ; +1 646 223 8780))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Q1 loss, flags charge in Q2 ** Aurora Cannabis ACB.N: up 1.2% BUZZ-Rises after announcing job cuts, restructuring ** IHS Markit INFO.N: up 0.3% BUZZ-Up on Q2 profit beat ** Altice USA ATUS.N: up 1.6% BUZZ-Rises as Altice Europe disconnects ** Yeti Holdings YETI.N: up 8.3% BUZZ-Yeti Holdings: Piper Sandler raises PT citing strong demand for co's outdoor products ** Visa Inc V.N: up 2.5% BUZZ-U.S. payment processors: Oppenheimer picks Visa over Mastercard The 11 major S&P 500 sectors: Communication Services Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's three major indexes rose on Tuesday as improving economic data and the prospect of more stimulus bolstered hopes of a swift recovery, while a jump in technology shares powered the Nasdaq to another record high. The top three S&P 500 .PG.INX percentage gainers: ** Mohawk Industries Inc , up 10% ** Sysco Corp , up 6.1% ** Darden Restaurants Inc , up 4.9% The top three S&P 500 .PL.INX percentage losers: ** American Airlines Group , down 7.1% ** United Airlines Holding , down 3.5% ** L3harris Tchnologies Inc , down 2.3% The top three NYSE .PG.N percentage gainers: ** China Rapid Finance , up 43.3% ** Caledonia Mining Corp , up 30.6% ** Dynagas LNG Partners , up 20% The top three NYSE .PL.N percentage losers: ** Spirit Aerosystems Holding , down 14.1% ** American Shared Hospital Services , down 13.7% ** Milestone Scientific Inc , down 11.6% The top three Nasdaq .PG.O percentage gainers: ** Fuwei Films Holding , up 41.2% ** Translte Bio Inc , up 36.2% ** Cyclern Therapeutics , up 35.8% The top three Nasdaq .PL.O percentage losers: ** Kirklands Inc , down 25.9% ** Nemaura Medical , down 21.7% ** 9F Inc , down 18.4% ** Nike NKE.N: up 2.6% BUZZ-More PT raises ahead of results ** Recon Tech RCON.O: up 1.6% BUZZ-Up on MoU with Chinese water purification firm ** W&T Offshore WTI.N: up 1.8% BUZZ-Rises as Q1 profit beats on higher production ** ON Semiconductor ON.O: up 3.8% BUZZ-Piper Sandler sees significant recovery in 2021, upgrades ** Apple Inc AAPL.O: up 3.3% BUZZ-Apple: Up as brokerages raise iPhone shipment estimates, PT ** Translate Bio TBIO.O: up 36.2% BUZZ-Eyes record open on vaccine expansion deal with Sanofi ** Fuwei Films FFHL.O: up 41.2% BUZZ-Surges as co swings to Q1 profit ** Spirit Aerosystems SPR.N: down 14.2% BUZZ-Falls as Berenberg downgrades on Boeing's lower demand outlook ** Immunomedics Inc IMMU.O: up 1.1% BUZZ-Guggenheim picks Pfizer, Merck, Lilly among likely buyers ** Barnwell Industries Inc BRN.A: up 70.0% BUZZ-Soars as quarterly loss narrows ** Beyond Meat BYND.O: down 3.5% BUZZ-Down after Starbucks picks Impossible Foods for summer menu ** American Airlines AAL.O: down 7.1% BUZZ-Descends after $2 bln haul from upsized stock, convertible deals ** FedEx Corp FDX.N: up 1.3% BUZZ-BMO Capital expects Q4 to mark cyclical bottom for FedEx; raises PT ** Inovio Pharmaceuticals INO.O: up 34.8% BUZZ-Rises on $71 mln U.S. DoD grant for COVID-19 vaccine device ** Floor & Decor FND.N: up 2.2% BUZZ-Berenberg initiates with 'buy', cites co as compelling investment ** Luckin Coffee LK.O: down 15.4% BUZZ-Falls as coffee chain gets another de-listing notice ** Myovant Sciences MYOV.N: up 11.1% BUZZ-Up on positive data for endometriosis treatment ** Grocery Outlet GO.O: up 8.8% BUZZ-Jumps as set to join S&P MidCap 400 ** Sherwin-Williams SHW.N: up 0.2% BUZZ-Brokerages raise PT after sales forecast hike ** Sunesis Pharma SNSS.O: down 39.7% BUZZ-Plunges on stopping lead cancer drug development ** World Wrestling Entertainment Inc WWE.N: up 0.9% BUZZ-Needham raises PT as lockdown couch potatoes push viewership ** Broadway Financial BYFC.O: down 17.3% BUZZ-Key investor dissolves stake ** Air Products & Chemicals APD.N: up 1.4% BUZZ-Margins, growth to drive PT higher ** Canadian Solar CSIQ.O: up 4.1% BUZZ-Rises on two power purchase deals in Brazil ** Ideanomics IDEX.O: down 11.4% BUZZ-Falls on plans of up to $250 mln mixed-shelf offering ** PG&E Corp PCG.N: up 0.1% BUZZ-Lifts as co launches $5-bln-plus equity raise to fund bankruptcy emergence ** Palatin Technologies PTN.A: up 25.1% BUZZ-Jumps as drugmaker says developing potential COVID-19 treatment ** Workhorse Group Inc WKHS.O: up 19.8% BUZZ-Gallops to over 3-yr high as its delivery vans clear safety tests ** CorEnergy Infrastructure CORR.N: down 11.6% BUZZ-Falls on prelim. | Q1 loss, flags charge in Q2 ** Aurora Cannabis ACB.N: up 1.2% BUZZ-Rises after announcing job cuts, restructuring ** IHS Markit INFO.N: up 0.3% BUZZ-Up on Q2 profit beat ** Altice USA ATUS.N: up 1.6% BUZZ-Rises as Altice Europe disconnects ** Yeti Holdings YETI.N: up 8.3% BUZZ-Yeti Holdings: Piper Sandler raises PT citing strong demand for co's outdoor products ** Visa Inc V.N: up 2.5% BUZZ-U.S. payment processors: Oppenheimer picks Visa over Mastercard The 11 major S&P 500 sectors: Communication Services Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's three major indexes rose on Tuesday as improving economic data and the prospect of more stimulus bolstered hopes of a swift recovery, while a jump in technology shares powered the Nasdaq to another record high. The top three S&P 500 .PG.INX percentage gainers: ** Mohawk Industries Inc , up 10% ** Sysco Corp , up 6.1% ** Darden Restaurants Inc , up 4.9% The top three S&P 500 .PL.INX percentage losers: ** American Airlines Group , down 7.1% ** United Airlines Holding , down 3.5% ** L3harris Tchnologies Inc , down 2.3% The top three NYSE .PG.N percentage gainers: ** China Rapid Finance , up 43.3% ** Caledonia Mining Corp , up 30.6% ** Dynagas LNG Partners , up 20% The top three NYSE .PL.N percentage losers: ** Spirit Aerosystems Holding , down 14.1% ** American Shared Hospital Services , down 13.7% ** Milestone Scientific Inc , down 11.6% The top three Nasdaq .PG.O percentage gainers: ** Fuwei Films Holding , up 41.2% ** Translte Bio Inc , up 36.2% ** Cyclern Therapeutics , up 35.8% The top three Nasdaq .PL.O percentage losers: ** Kirklands Inc , down 25.9% ** Nemaura Medical , down 21.7% ** 9F Inc , down 18.4% ** Nike NKE.N: up 2.6% BUZZ-More PT raises ahead of results ** Recon Tech RCON.O: up 1.6% BUZZ-Up on MoU with Chinese water purification firm ** W&T Offshore WTI.N: up 1.8% BUZZ-Rises as Q1 profit beats on higher production ** ON Semiconductor ON.O: up 3.8% BUZZ-Piper Sandler sees significant recovery in 2021, upgrades ** Apple Inc AAPL.O: up 3.3% BUZZ-Apple: Up as brokerages raise iPhone shipment estimates, PT ** Translate Bio TBIO.O: up 36.2% BUZZ-Eyes record open on vaccine expansion deal with Sanofi ** Fuwei Films FFHL.O: up 41.2% BUZZ-Surges as co swings to Q1 profit ** Spirit Aerosystems SPR.N: down 14.2% BUZZ-Falls as Berenberg downgrades on Boeing's lower demand outlook ** Immunomedics Inc IMMU.O: up 1.1% BUZZ-Guggenheim picks Pfizer, Merck, Lilly among likely buyers ** Barnwell Industries Inc BRN.A: up 70.0% BUZZ-Soars as quarterly loss narrows ** Beyond Meat BYND.O: down 3.5% BUZZ-Down after Starbucks picks Impossible Foods for summer menu ** American Airlines AAL.O: down 7.1% BUZZ-Descends after $2 bln haul from upsized stock, convertible deals ** FedEx Corp FDX.N: up 1.3% BUZZ-BMO Capital expects Q4 to mark cyclical bottom for FedEx; raises PT ** Inovio Pharmaceuticals INO.O: up 34.8% BUZZ-Rises on $71 mln U.S. DoD grant for COVID-19 vaccine device ** Floor & Decor FND.N: up 2.2% BUZZ-Berenberg initiates with 'buy', cites co as compelling investment ** Luckin Coffee LK.O: down 15.4% BUZZ-Falls as coffee chain gets another de-listing notice ** Myovant Sciences MYOV.N: up 11.1% BUZZ-Up on positive data for endometriosis treatment ** Grocery Outlet GO.O: up 8.8% BUZZ-Jumps as set to join S&P MidCap 400 ** Sherwin-Williams SHW.N: up 0.2% BUZZ-Brokerages raise PT after sales forecast hike ** Sunesis Pharma SNSS.O: down 39.7% BUZZ-Plunges on stopping lead cancer drug development ** World Wrestling Entertainment Inc WWE.N: up 0.9% BUZZ-Needham raises PT as lockdown couch potatoes push viewership ** Broadway Financial BYFC.O: down 17.3% BUZZ-Key investor dissolves stake ** Air Products & Chemicals APD.N: up 1.4% BUZZ-Margins, growth to drive PT higher ** Canadian Solar CSIQ.O: up 4.1% BUZZ-Rises on two power purchase deals in Brazil ** Ideanomics IDEX.O: down 11.4% BUZZ-Falls on plans of up to $250 mln mixed-shelf offering ** PG&E Corp PCG.N: up 0.1% BUZZ-Lifts as co launches $5-bln-plus equity raise to fund bankruptcy emergence ** Palatin Technologies PTN.A: up 25.1% BUZZ-Jumps as drugmaker says developing potential COVID-19 treatment ** Workhorse Group Inc WKHS.O: up 19.8% BUZZ-Gallops to over 3-yr high as its delivery vans clear safety tests ** CorEnergy Infrastructure CORR.N: down 11.6% BUZZ-Falls on prelim. | Q1 loss, flags charge in Q2 ** Aurora Cannabis ACB.N: up 1.2% BUZZ-Rises after announcing job cuts, restructuring ** IHS Markit INFO.N: up 0.3% BUZZ-Up on Q2 profit beat ** Altice USA ATUS.N: up 1.6% BUZZ-Rises as Altice Europe disconnects ** Yeti Holdings YETI.N: up 8.3% BUZZ-Yeti Holdings: Piper Sandler raises PT citing strong demand for co's outdoor products ** Visa Inc V.N: up 2.5% BUZZ-U.S. payment processors: Oppenheimer picks Visa over Mastercard The 11 major S&P 500 sectors: Communication Services The top three S&P 500 .PG.INX percentage gainers: ** Mohawk Industries Inc , up 10% ** Sysco Corp , up 6.1% ** Darden Restaurants Inc , up 4.9% The top three S&P 500 .PL.INX percentage losers: ** American Airlines Group , down 7.1% ** United Airlines Holding , down 3.5% ** L3harris Tchnologies Inc , down 2.3% The top three NYSE .PG.N percentage gainers: ** China Rapid Finance , up 43.3% ** Caledonia Mining Corp , up 30.6% ** Dynagas LNG Partners , up 20% The top three NYSE .PL.N percentage losers: ** Spirit Aerosystems Holding , down 14.1% ** American Shared Hospital Services , down 13.7% ** Milestone Scientific Inc , down 11.6% The top three Nasdaq .PG.O percentage gainers: ** Fuwei Films Holding , up 41.2% ** Translte Bio Inc , up 36.2% ** Cyclern Therapeutics , up 35.8% The top three Nasdaq .PL.O percentage losers: ** Kirklands Inc , down 25.9% ** Nemaura Medical , down 21.7% ** 9F Inc , down 18.4% ** Nike NKE.N: up 2.6% BUZZ-More PT raises ahead of results ** Recon Tech RCON.O: up 1.6% BUZZ-Up on MoU with Chinese water purification firm ** W&T Offshore WTI.N: up 1.8% BUZZ-Rises as Q1 profit beats on higher production ** ON Semiconductor ON.O: up 3.8% BUZZ-Piper Sandler sees significant recovery in 2021, upgrades ** Apple Inc AAPL.O: up 3.3% BUZZ-Apple: Up as brokerages raise iPhone shipment estimates, PT ** Translate Bio TBIO.O: up 36.2% BUZZ-Eyes record open on vaccine expansion deal with Sanofi ** Fuwei Films FFHL.O: up 41.2% BUZZ-Surges as co swings to Q1 profit ** Spirit Aerosystems SPR.N: down 14.2% BUZZ-Falls as Berenberg downgrades on Boeing's lower demand outlook ** Immunomedics Inc IMMU.O: up 1.1% BUZZ-Guggenheim picks Pfizer, Merck, Lilly among likely buyers ** Barnwell Industries Inc BRN.A: up 70.0% BUZZ-Soars as quarterly loss narrows ** Beyond Meat BYND.O: down 3.5% BUZZ-Down after Starbucks picks Impossible Foods for summer menu ** American Airlines AAL.O: down 7.1% BUZZ-Descends after $2 bln haul from upsized stock, convertible deals ** FedEx Corp FDX.N: up 1.3% BUZZ-BMO Capital expects Q4 to mark cyclical bottom for FedEx; raises PT ** Inovio Pharmaceuticals INO.O: up 34.8% BUZZ-Rises on $71 mln U.S. DoD grant for COVID-19 vaccine device ** Floor & Decor FND.N: up 2.2% BUZZ-Berenberg initiates with 'buy', cites co as compelling investment ** Luckin Coffee LK.O: down 15.4% BUZZ-Falls as coffee chain gets another de-listing notice ** Myovant Sciences MYOV.N: up 11.1% BUZZ-Up on positive data for endometriosis treatment ** Grocery Outlet GO.O: up 8.8% BUZZ-Jumps as set to join S&P MidCap 400 ** Sherwin-Williams SHW.N: up 0.2% BUZZ-Brokerages raise PT after sales forecast hike ** Sunesis Pharma SNSS.O: down 39.7% BUZZ-Plunges on stopping lead cancer drug development ** World Wrestling Entertainment Inc WWE.N: up 0.9% BUZZ-Needham raises PT as lockdown couch potatoes push viewership ** Broadway Financial BYFC.O: down 17.3% BUZZ-Key investor dissolves stake ** Air Products & Chemicals APD.N: up 1.4% BUZZ-Margins, growth to drive PT higher ** Canadian Solar CSIQ.O: up 4.1% BUZZ-Rises on two power purchase deals in Brazil ** Ideanomics IDEX.O: down 11.4% BUZZ-Falls on plans of up to $250 mln mixed-shelf offering ** PG&E Corp PCG.N: up 0.1% BUZZ-Lifts as co launches $5-bln-plus equity raise to fund bankruptcy emergence ** Palatin Technologies PTN.A: up 25.1% BUZZ-Jumps as drugmaker says developing potential COVID-19 treatment ** Workhorse Group Inc WKHS.O: up 19.8% BUZZ-Gallops to over 3-yr high as its delivery vans clear safety tests ** CorEnergy Infrastructure CORR.N: down 11.6% BUZZ-Falls on prelim. up 1.48% Consumer Discretionary | Q1 loss, flags charge in Q2 ** Aurora Cannabis ACB.N: up 1.2% BUZZ-Rises after announcing job cuts, restructuring ** IHS Markit INFO.N: up 0.3% BUZZ-Up on Q2 profit beat ** Altice USA ATUS.N: up 1.6% BUZZ-Rises as Altice Europe disconnects ** Yeti Holdings YETI.N: up 8.3% BUZZ-Yeti Holdings: Piper Sandler raises PT citing strong demand for co's outdoor products ** Visa Inc V.N: up 2.5% BUZZ-U.S. payment processors: Oppenheimer picks Visa over Mastercard The 11 major S&P 500 sectors: Communication Services Eikon search string for individual stock moves: STXBZ The Day Ahead newsletter: http://tmsnrt.rs/2ggOmBi The Morning News Call newsletter: http://tmsnrt.rs/2fwPLTh Wall Street's three major indexes rose on Tuesday as improving economic data and the prospect of more stimulus bolstered hopes of a swift recovery, while a jump in technology shares powered the Nasdaq to another record high. .N At 13:30 ET, the Dow Jones Industrial Average .DJI was up 1.04% at 26,294.56. |
37394.0 | 2020-06-23 00:00:00 UTC | Pot company Aurora Cannabis plans layoffs, closing five facilities | ACB | https://www.nasdaq.com/articles/pot-company-aurora-cannabis-plans-layoffs-closing-five-facilities-2020-06-23 | nan | nan | June 23 (Reuters) - Aurora Cannabis ACB.TO, ACB.N said on Tuesday it will lay off a big part of its workforce and plans to shut five facilities over the next two quarters, as the cash-crunched cannabis industry finds itself scrambling to cut costs amid the coronavirus pandemic.
The Canadian pot producer said it has cut its selling, general and administrative workforce by 25% and will lay off another 30% of its production staff over the next two quarters.
(Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli)
((Arunima.Kumar@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | June 23 (Reuters) - Aurora Cannabis ACB.TO, ACB.N said on Tuesday it will lay off a big part of its workforce and plans to shut five facilities over the next two quarters, as the cash-crunched cannabis industry finds itself scrambling to cut costs amid the coronavirus pandemic. The Canadian pot producer said it has cut its selling, general and administrative workforce by 25% and will lay off another 30% of its production staff over the next two quarters. (Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | June 23 (Reuters) - Aurora Cannabis ACB.TO, ACB.N said on Tuesday it will lay off a big part of its workforce and plans to shut five facilities over the next two quarters, as the cash-crunched cannabis industry finds itself scrambling to cut costs amid the coronavirus pandemic. The Canadian pot producer said it has cut its selling, general and administrative workforce by 25% and will lay off another 30% of its production staff over the next two quarters. (Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | June 23 (Reuters) - Aurora Cannabis ACB.TO, ACB.N said on Tuesday it will lay off a big part of its workforce and plans to shut five facilities over the next two quarters, as the cash-crunched cannabis industry finds itself scrambling to cut costs amid the coronavirus pandemic. The Canadian pot producer said it has cut its selling, general and administrative workforce by 25% and will lay off another 30% of its production staff over the next two quarters. (Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | June 23 (Reuters) - Aurora Cannabis ACB.TO, ACB.N said on Tuesday it will lay off a big part of its workforce and plans to shut five facilities over the next two quarters, as the cash-crunched cannabis industry finds itself scrambling to cut costs amid the coronavirus pandemic. The Canadian pot producer said it has cut its selling, general and administrative workforce by 25% and will lay off another 30% of its production staff over the next two quarters. (Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli) ((Arunima.Kumar@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. |
37395.0 | 2020-06-23 00:00:00 UTC | 3 Marijuana Stocks Wall Street Expects to Decline | ACB | https://www.nasdaq.com/articles/3-marijuana-stocks-wall-street-expects-to-decline-2020-06-23 | nan | nan | If you think the stock market has been taken on a wild ride over the past four months, then you haven't been keeping an eye on the cannabis industry.
Prior to April 2019, marijuana stocks were practically unstoppable. The vast majority were up by a triple-digit or quadruple-digit percentage over the course of 12 or 24 months, and sales projections were soaring. Considering that tens of billions of dollars is sold annually in the black market, it seemed logical to Wall Street and investors that legal cannabis channels would see a rapid uptick in sales. But this hasn't been the case.
Over the past 14-plus months, marijuana stocks have been beaten to a pulp, with many losing anywhere from 50% to 90% of their value. Supply issues to our north, high tax rates in the U.S., and financing concerns have weighed on virtually all North American pot stocks. As a result Wall Street's expectations for the industry have come way down.
But despite a tempered forecast, nearly all pot stocks have a higher consensus price target from Wall Street than their closing price this past weekend. The following three popular marijuana stocks are the exception to the rule, with Wall Street's consensus price target implying an expected decline.
Image source: Getty Images.
Aurora Cannabis: Estimated downside of 22%
You might be surprised to learn that the most popular marijuana stock of them all, Aurora Cannabis (NYSE: ACB), is expected to lose 22% of its value, according to Wall Street's consensus price target.
Once on track to lead the world in legal pot production, Aurora Cannabis is a shell of what investors envisioned the company would become. After overextending itself financially, Aurora has been paring back its costs at a rapid clip. Construction at two of its largest cultivation projects has been put on hold to conserve capital, while a 1-million-square-foot greenhouse was sold. The company has also turned to layoffs to reduce costs.
At the same time, Aurora Cannabis has had limited access to traditional forms of financing. Given the numerous issues the Canadian marijuana industry is contending with in its early stages, banks have been unwilling to approve large loans. In order to raise money and close acquisitions, Aurora Cannabis has leaned heavily on using its common stock as collateral. As a result, its outstanding share count has soared from a little over 1 million in June 2014 (adjusting for the recent 1-for-12 reverse split) to probably around 113 million after the recently completed Reliva acquisition. With a $350 million at-the-market stock offering also at its disposal, Wall Street might simply be counting on future share-based dilution.
Aurora Cannabis' balance sheet also fails to inspire confidence. Currently, 51% of the total assets are classified as goodwill -- implying the company grossly overpaid for its acquisitions -- with rising inventory levels suggesting that a sizable impairment may be in the company's future.
Image source: Getty Images.
Cronos Group: Estimated downside of 31%
Perhaps the biggest surprise is that Wall Street foresees the most downside in Cronos Group (NASDAQ: CRON), which happens to be one of the most cash-rich cannabis stocks. Even with $1.33 billion in cash and cash equivalents, Wall Street believes Cronos Group and its $2.25 billion market cap will decline by 31%.
Similar to Aurora, Cronos Group has failed to live up to its primarily billing. In Cronos' case, it was widely expected by the investment community to leverage its equity investment/partnership with Altria Group to become the leader of cannabis vape products in Canada. However, a vape-related health scare in the U.S. in 2019, compounded with Canadian supply issues and coronavirus-related supply problems, have slowed the growth of vaping products to our north. The fact is, Altria's investment in Cronos Group hasn't yielded anything to write home about.
Making matters worse, Cronos Group isn't even a major player in the production department. Peace Naturals is capable of up to 40,000 kilos a year of output, but has had some of its square footage partially repurposed for derivatives. The result being that Cronos only generated a little over $8 million in sales in its most recent quarter. By comparison, this is a company that's lost around $155 million on an operating basis over the trailing five quarters. This means the company's cash hoard may not last as long as expected unless there's serious operational progress made soon.
Image source: Getty Images.
Canopy Growth: Estimated downside of 3%
Finally, Wall Street isn't as fond as you'd think of the largest marijuana stock in the world by market cap, Canopy Growth (NYSE: CGC). Even though Canopy has lost approximately two-thirds of its value over the past 14 months, Wall Street's consensus price target implies 3% additional downside.
Again, the surprise here might just be that Canopy Growth has the most cash of any marijuana stock (almost $2 billion Canadian), but is expected to lose value, per Wall Street. Canopy netted the vast majority of this cash from multiple equity investments, courtesy of spirits giant Constellation Brands (NYSE: STZ). Investors had expected that Canopy would use its mountain of cash to expand internationally and bolster its Canadian infrastructure. Instead, all they've witnessed is massive operating losses and more than half of the company's CA$4.5 billion cash pile disappear.
If there is a positive here for Canopy Growth, it's that former Constellation Brands Chief Financial Officer David Klein is now running things. Klein has experience in the consumer-packaged goods industry, and he's brought a no-nonsense cost-cutting approach to Canopy. To date, 3 million square feet of licensed indoor greenhouses have been permanently closed, with the company also announcing layoffs.
Nevertheless, Canopy Growth remains a work in progress. Profitability is unlikely until 2022, at the earliest, and there appears to be a growing likelihood of impairment charges regarding its goodwill and inventory levels. The reality is that Wall Street's consensus price target may still be too high given the risks that lie ahead.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis: Estimated downside of 22% You might be surprised to learn that the most popular marijuana stock of them all, Aurora Cannabis (NYSE: ACB), is expected to lose 22% of its value, according to Wall Street's consensus price target. Considering that tens of billions of dollars is sold annually in the black market, it seemed logical to Wall Street and investors that legal cannabis channels would see a rapid uptick in sales. In Cronos' case, it was widely expected by the investment community to leverage its equity investment/partnership with Altria Group to become the leader of cannabis vape products in Canada. | Aurora Cannabis: Estimated downside of 22% You might be surprised to learn that the most popular marijuana stock of them all, Aurora Cannabis (NYSE: ACB), is expected to lose 22% of its value, according to Wall Street's consensus price target. The following three popular marijuana stocks are the exception to the rule, with Wall Street's consensus price target implying an expected decline. Canopy Growth: Estimated downside of 3% Finally, Wall Street isn't as fond as you'd think of the largest marijuana stock in the world by market cap, Canopy Growth (NYSE: CGC). | Aurora Cannabis: Estimated downside of 22% You might be surprised to learn that the most popular marijuana stock of them all, Aurora Cannabis (NYSE: ACB), is expected to lose 22% of its value, according to Wall Street's consensus price target. Canopy Growth: Estimated downside of 3% Finally, Wall Street isn't as fond as you'd think of the largest marijuana stock in the world by market cap, Canopy Growth (NYSE: CGC). Again, the surprise here might just be that Canopy Growth has the most cash of any marijuana stock (almost $2 billion Canadian), but is expected to lose value, per Wall Street. | Aurora Cannabis: Estimated downside of 22% You might be surprised to learn that the most popular marijuana stock of them all, Aurora Cannabis (NYSE: ACB), is expected to lose 22% of its value, according to Wall Street's consensus price target. As a result Wall Street's expectations for the industry have come way down. Again, the surprise here might just be that Canopy Growth has the most cash of any marijuana stock (almost $2 billion Canadian), but is expected to lose value, per Wall Street. |
37396.0 | 2020-06-22 00:00:00 UTC | Cannabis Stocks: Buy This, Not That | ACB | https://www.nasdaq.com/articles/cannabis-stocks%3A-buy-this-not-that-2020-06-22 | nan | nan | The issues in the cannabis sector far predate the current economic crisis caused by the COVID-19 pandemic. Over the past year or so, marijuana companies have generally reported underwhelming financial results, much to the dismay of pot investors who had high hopes for the industry. Over the trailing twelve-month period, the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) -- an industry benchmark -- is down by 61.3%, compared to a 4.9% rise for the S&P 500.
Naturally, there are plenty of cannabis stocks investors ought to avoid, but there are also some pot companies worth investing in today. Let's discuss two cannabis companies, one of which is a buy, and one of which isn't worth your money.
HMMJ.U data by YCharts
The stock to buy
Trulieve Cannabis (OTC: TCNNF) is a vertically integrated multi-state operator with a particular focus on the cannabis market in Florida. Trulieve's strategy to hone in on one market (for the most part) is in sharp contrast with that of some of its rivals -- such as Curaleaf Holdings (OTC: CURLF) and others -- which have sought to build wide presences across several U.S. states. However, Trulieve's results speak for themselves, at least so far. Unlike most of its peers in the cannabis industry, Trulieve has been able to record consistent profits. During the first quarter, the company recorded revenue of $96.1 million, representing a 21% sequential increase and a 116% year over year increase.
Trulieve's net income for the quarter came in at about $14 million, although that was a slight decline from the $14.7 million it recorded during the prior-year quarter; Trulieve ended the quarter with 47 dispensaries in the sunshine state. It is also worth noting that as of March 31, the company was responsible for more than 50% of all the cannabis flower sales in Florida, which is a testament to Trulieve's strong presence in this market.
Image source: Getty Images.
Looking forward, Trulieve is the best way to profit from the potentially lucrative cannabis market in Florida. The U.S. cannabis market will grow rapidly over the next few years, with Florida -- one of the world's largest medical-only cannabis markets -- set to exceed the $2 billion mark in spending by 2024, according to the research firm BDS Analytics. Note that in 2019, total spending on cannabis products in Florida was a little over $650 million. In other words, this market will grow significantly over the next few years.
Further, the ongoing crisis has done little to slow down this trend. Cannabis sales in Florida (and elsewhere, for that matter) briefly increased recently, especially as social distancing measures began to take form. This could be one of the reasons why Trulieve has performed well on the stock market year to date. And given the company's leading position in the sunshine state -- and the favorable trends we will likely see in the coming years -- I expect Trulieve to continue outperforming the market in the long run.
The stock to avoid
Aurora Cannabis (NYSE: ACB) has been making a lot of noise. Last month, the Edmonton, Canada-based company released surprisingly strong Q3 2020 financial results. Perhaps the biggest surprise in the company's quarterly update was its top line. During the quarter, Aurora Cannabis recorded total net revenue of CA$75.5 million, representing a 35% sequential increase. Also, the company's operating expenses decreased by about 26% sequentially to roughly CA$111 million, and Aurora Cannabis' net loss of CA$137.4 million was significantly lower than the gigantic CA$1.3 billion it recorded during the second quarter. Another recent bit of good news for Aurora Cannabis was the acquisition of Reliva, a U.S. retail cannabidiol (CBD) brands; the acquisition closed on May. 28.
As part of the deal, Reliva's members received about $40 million worth of Aurora Cannabis' shares, and pending performance-related milestone, they could receive an additional $45 million of Aurora Cannabis' shares (or cash) over the next two years. The opportunity within the U.S. CBD market could be exciting for Aurora, and the company's latest financial results were certainly a step in the right direction. However, I still think it is best to avoid buying shares of Aurora, at least for now.
Here are two reasons why. First, thanks to a slew of acquisitions, Aurora has an abnormal amount of goodwill on its balance sheet. As of March 31, the company had about CA$2.4 billion in goodwill, which comes out to a little more than half its total assets. Of course, Aurora hoped to conquer the industry thanks to these acquisitions, but its reckless spending has yet to bear fruit. And what's more, investors can expect significant writedowns for the pot grower in the future. Second, unlike some of its peers in the cannabis industry, Aurora has yet to find a partner with deep pockets.
The company has already made it a habit to resort to dilutive forms of financing, and without the help of a partner, it will likely continue to do so. It's worth noting that the company famously brought billionaire Nelson Peltz as a strategic advisor to help it secure a partner. But more than a year later, it still hasn't happened. These issues (and others) will continue to plague Aurora for the foreseeable future, and while I'm hopeful the company will eventually turn things around, I think investors should stay away from this cannabis stock for now.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Prosper Junior Bakiny owns shares of Aurora Cannabis Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The stock to avoid Aurora Cannabis (NYSE: ACB) has been making a lot of noise. Trulieve's strategy to hone in on one market (for the most part) is in sharp contrast with that of some of its rivals -- such as Curaleaf Holdings (OTC: CURLF) and others -- which have sought to build wide presences across several U.S. states. And given the company's leading position in the sunshine state -- and the favorable trends we will likely see in the coming years -- I expect Trulieve to continue outperforming the market in the long run. | The stock to avoid Aurora Cannabis (NYSE: ACB) has been making a lot of noise. During the first quarter, the company recorded revenue of $96.1 million, representing a 21% sequential increase and a 116% year over year increase. During the quarter, Aurora Cannabis recorded total net revenue of CA$75.5 million, representing a 35% sequential increase. | The stock to avoid Aurora Cannabis (NYSE: ACB) has been making a lot of noise. HMMJ.U data by YCharts The stock to buy Trulieve Cannabis (OTC: TCNNF) is a vertically integrated multi-state operator with a particular focus on the cannabis market in Florida. Also, the company's operating expenses decreased by about 26% sequentially to roughly CA$111 million, and Aurora Cannabis' net loss of CA$137.4 million was significantly lower than the gigantic CA$1.3 billion it recorded during the second quarter. | The stock to avoid Aurora Cannabis (NYSE: ACB) has been making a lot of noise. Naturally, there are plenty of cannabis stocks investors ought to avoid, but there are also some pot companies worth investing in today. It is also worth noting that as of March 31, the company was responsible for more than 50% of all the cannabis flower sales in Florida, which is a testament to Trulieve's strong presence in this market. |
37397.0 | 2020-06-22 00:00:00 UTC | 3 Cannabis Stock CEOs Who May Lose Their Jobs | ACB | https://www.nasdaq.com/articles/3-cannabis-stock-ceos-who-may-lose-their-jobs-2020-06-22 | nan | nan | For a long time, cannabis investors could seemingly do no wrong. Prior to April 2019, the vast majority of pot stocks had rallied by a triple-digit or quadruple-digit percentage, with the expectation that ongoing legalizations throughout North America and around the world would move black-market transactions into legal channels over time.
However, this hasn't proved to be the case. Canada has contended with an assortment of supply concerns, with U.S. marijuana stocks hampered by high tax rates on legal product in a handful of key markets. The North American pot industry has also struggled to gain access to traditional forms of financing. Add on the coronavirus disease 2019 (COVID-19) pandemic for good measure, and you can see why marijuana stocks have been clobbered over the past 14-plus months.
But it's not just pot stock shareholders that need to be concerned with the underperformance of the cannabis industry. A number of marijuana stock CEOs look to be on the hot seat and in danger of losing their jobs if things don't turn around very soon.
Image source: Getty Images.
Quite a few pot stock CEOs have already stepped down or been shown the door
If you think I'm being a bit overdramatic, think again. Constellation Brands (NYSE: STZ) groomed its Chief Financial Officer David Klein for Canopy Growth's (NYSE: CGC) top job after co-CEOs Bruce Linton and Mark Zekulin were let go months apart from each other. Constellation, which holds a 38% stake in Canopy Growth, had implied that Canopy's widening losses were unacceptable and a drain on its operating income statements. Since taking over the lead role at Canopy, Constellation's former CFO David Klein has permanently closed 3 million square feet of cultivation space and overseen multiple rounds of layoffs.
The pressure also appeared to get the better of Terry Booth, the now-former CEO of Aurora Cannabis (NYSE: ACB). Even though Booth stepped down and retired (i.e., wasn't fired), the writing appeared to be on the wall that he'd be shown the door if he hadn't voluntarily retired. At one time pegged as the world's leading legal pot producer, Aurora has halted construction at two of its largest facilities and sold off a 1-million-square-foot greenhouse. Additionally, in spite of having access to two dozen markets outside of Canada, Aurora's international sales have been relatively anemic. With share-based dilution crushing shareholders, Booth looked like a likely candidate on the chopping block entering 2020.
Even Aphria's (NASDAQ: APHA) longtime CEO Vic Neufeld stepped down in January 2019. Though Neufeld cited health and family reasons for his departure, the announcement that he would leave came just five weeks after a short-seller report alleged wrongdoing at Aphria. Despite many of these allegations being proved inaccurate, it was shown that Neufeld held a conflict of interest in Aphria's Latin American acquisition. Had Neufeld not stepped down in January, he would likely have been pressured to do so months later.
Image source: Getty Images.
These cannabis stock CEOs may lose their jobs next
If we've learned anything about the marijuana space over the past year, it's that the time for promises is over. It's put up or shut up time for these businesses, and significant underperformance will simply not be tolerated by investors for any significant length of time. With that being said, the following three pot stock CEOs may be next on the chopping block.
HEXO CEO: Sebastien St-Louis
In my view, the likeliest CEO to get the boot is Sebastien St-Louis, who leads Quebec-based HEXO (NYSE: HEXO).
By the second quarter of 2019, HEXO looked to be on track as a major Canadian player. The company's flagship Gatineau facility was coming along on schedule, and HEXO had boosted its production capacity via the Newstrike Brands acquisition. Further, the company had struck the largest wholesale agreement with a single province in 2018 -- a 200,000 kilo-in-aggregate deal over five years with Quebec.
Yet, one year later, HEXO has made plans to close and sell the Niagara facility acquired from Newstrike, and has written down the vast majority of that deal. St-Louis has also overseen layoffs to conserve capital, and has idled some of the company's cultivation space at Gatineau.
But what might be most damning of all is commentary from St-Louis during a conference call with analysts last year that suggested HEXO would need to earn 20% market share in Canada to become profitable. That's an insane task given that HEXO is selling its stock to raise capital and halting some of its production to reduce costs.
Image source: Getty Images.
Cronos Group CEO: Michael Gorenstein
Another marijuana stock CEO that should consider himself on the hot seat is Cronos Group's (NASDAQ: CRON) Michael Gorenstein.
On the surface, Gorenstein deserves a lot of credit for helping to nab Cronos an equity investor. For those who may recall, Altria Group became a 45% equity holder in Cronos in March 2019. In return, Cronos received $1.8 billion, which was perfect given that the company only had a little more than $20 million in cash on hand prior to the deal closing. The expectation was that Cronos would use this cash to enter new markets and expand its line of high-margin derivatives. Unfortunately, investors have been sorely disappointed since March 2019.
Though Cronos did acquire Redwood Holdings for $300 million to add the Lord Jones brand of cannabidiol (CBD) beauty products to its portfolio, the buzz surrounding CBD products in the U.S. has died down in a big way. With the U.S. Food and Drug Administration putting its foot down on CBD as an additive to food and beverages, CBD sales haven't been turning heads.
What's more, Cronos Group's mediocre production from Peace Naturals resulted in only a little more than $8 million in first quarter sales. Over the past five quarters, Cronos has lost almost $155 million, combined, on an adjusted operating basis. It's simply not making meaningful progress on the operating front, which could spell doom for Gorenstein's job security.
Image source: Getty Images.
Tilray CEO: Brendan Kennedy
Finally, Tilray (NASDAQ: TLRY) CEO Brendan Kennedy should consider himself on a short leash with the investment community. It's worth noting, though, that Kennedy is also the Executive Chairman of Privateer Holdings, which Tilray acquired last year. Privateer is Tilray's largest shareholder, which could make removing Kennedy a bit tricky.
Kennedy looked to be steering Tilray toward greatness in 2018. The company had its initial public offering in July 2018 and quickly skyrocketed from its list price of $17 to as much as $300 on an intraday basis in September 2018. Entering 2019 with more than $500 million in cash and a well-known medical cannabis brand, Tilray was expected to have little issue delivering for investors.
Then, in March 2019, Kennedy announced plans to de-emphasize investments in Canada in favor of the United States and Europe. Though these are larger markets than Canada, in terms of peak weed sales potential, it was a really odd decision to make just over five months after recreational pot sales began in Canada. The capital outlays tied to this international push have significantly drained Tilray's cash on hand, and recently coerced the company to sell its common stock at a less than advantageous price to raise money.
Without a clearly defined operating plan, and the company also getting blindsided by weak U.S. CBD sales, Kennedy looks to be the scapegoat for Tilray's underperformance.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The pressure also appeared to get the better of Terry Booth, the now-former CEO of Aurora Cannabis (NYSE: ACB). Canada has contended with an assortment of supply concerns, with U.S. marijuana stocks hampered by high tax rates on legal product in a handful of key markets. Since taking over the lead role at Canopy, Constellation's former CFO David Klein has permanently closed 3 million square feet of cultivation space and overseen multiple rounds of layoffs. | The pressure also appeared to get the better of Terry Booth, the now-former CEO of Aurora Cannabis (NYSE: ACB). Since taking over the lead role at Canopy, Constellation's former CFO David Klein has permanently closed 3 million square feet of cultivation space and overseen multiple rounds of layoffs. Cronos Group CEO: Michael Gorenstein Another marijuana stock CEO that should consider himself on the hot seat is Cronos Group's (NASDAQ: CRON) Michael Gorenstein. | The pressure also appeared to get the better of Terry Booth, the now-former CEO of Aurora Cannabis (NYSE: ACB). These cannabis stock CEOs may lose their jobs next If we've learned anything about the marijuana space over the past year, it's that the time for promises is over. HEXO CEO: Sebastien St-Louis In my view, the likeliest CEO to get the boot is Sebastien St-Louis, who leads Quebec-based HEXO (NYSE: HEXO). | The pressure also appeared to get the better of Terry Booth, the now-former CEO of Aurora Cannabis (NYSE: ACB). These cannabis stock CEOs may lose their jobs next If we've learned anything about the marijuana space over the past year, it's that the time for promises is over. Yet, one year later, HEXO has made plans to close and sell the Niagara facility acquired from Newstrike, and has written down the vast majority of that deal. |
37398.0 | 2020-06-22 00:00:00 UTC | Robinhood Is Not Moving The Entire Stock Market | ACB | https://www.nasdaq.com/articles/robinhood-is-not-moving-the-entire-stock-market-2020-06-22 | nan | nan | Robinhood and its users have been getting a lot of attention, as analysts and large investors point to the rise of retail investment now that people are stuck at home, and sports and gambling are largely grounded. Robinhood boasts a staggering 13 million accounts, but a great many of those accounts are used by younger people. Younger people don't have much money. It's a great thing to see younger investors learning how things work, but relative to the scale of capital in the stock market, Robinhood's user base is inconsequential.
More than anything, the trades are drawing attention because of how concentrated they are in battered stocks.
Image Source: Getty Images
Not enough capital
According to JMP Securities, the average account size for a typical Robinhood account ranges from $1,000 to $5,000. The app passed 13 million users this year.
Let's be liberal and say the average account balance is $5,000. Keeping the math straight with 13 million users, that would give Robinhood's community of retail investors a capitalization of $65 billion on the high end of the spectrum. Sixty-five billion is a lot of money for anyone, but for the market, it's not much at all.
Between February 19 and March 12, the U.S. stock market lost $11.5 trillion in market capitalization as COVID-19 hit. That's right --trillions. Netflix (NASDAQ: NFLX) shares hold a market capitalization of $196.57 billion. That's roughly three times the size of all of Robinhood's assets under management if each account holds $5,000, and the number of accounts is still close to 13 million.
When you look at it from this perspective, it's really tough to make the argument that Robinhood users have any real influence on the market.
They're chasing cheap stocks, which can make some waves
On June 18, Robinhood's list of 100 most popular stocks included names like Ford (NYSE: F), General Electric (NYSE: GE), American Airlines Group (NASDAQ: AAL), Disney (NYSE: DIS), Delta Air Lines (NYSE: DAL), and Carnival (NYSE: CCL). Airlines and cruise lines have been some of the most volatile stocks in recent weeks. Robinhood's clientele are interested in cheap stocks that have had a rocky start to the year. Those are stocks that have been battered by COVID-19 and have offered big volatility in a short period of time. You can make the argument that Robinhood's assets under management might carry influence over a smaller grouping like this, although even here, the market capitalizations of these stocks are substantial. It's good for trading but not necessarily for investing.
In April, the most popular stock on Robinhood was Aurora Cannabis (NYSE: ACB). The last two years have not been kind to Aurora's stock price, which is down 84% since June 2018. Like many marijuana stocks, expectations were a bit high. Sales and earnings have failed to live up to the hype. The fact that this stock was the most popular on Robinhood shows you the choices that many of its users are making.
Combine that with some truly huge daily moves on nearly unknown micro-cap stocks, and it's easy to understand where people are getting the idea that Robinhood's users can move markets. It's true that they're investing heavily in some of the battered names that are making headlines. As good as it is for younger people to get involved in investing, though, it doesn't equate to moving the entire stock market.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In April, the most popular stock on Robinhood was Aurora Cannabis (NYSE: ACB). Keeping the math straight with 13 million users, that would give Robinhood's community of retail investors a capitalization of $65 billion on the high end of the spectrum. You can make the argument that Robinhood's assets under management might carry influence over a smaller grouping like this, although even here, the market capitalizations of these stocks are substantial. | In April, the most popular stock on Robinhood was Aurora Cannabis (NYSE: ACB). Netflix (NASDAQ: NFLX) shares hold a market capitalization of $196.57 billion. They're chasing cheap stocks, which can make some waves On June 18, Robinhood's list of 100 most popular stocks included names like Ford (NYSE: F), General Electric (NYSE: GE), American Airlines Group (NASDAQ: AAL), Disney (NYSE: DIS), Delta Air Lines (NYSE: DAL), and Carnival (NYSE: CCL). | In April, the most popular stock on Robinhood was Aurora Cannabis (NYSE: ACB). It's a great thing to see younger investors learning how things work, but relative to the scale of capital in the stock market, Robinhood's user base is inconsequential. They're chasing cheap stocks, which can make some waves On June 18, Robinhood's list of 100 most popular stocks included names like Ford (NYSE: F), General Electric (NYSE: GE), American Airlines Group (NASDAQ: AAL), Disney (NYSE: DIS), Delta Air Lines (NYSE: DAL), and Carnival (NYSE: CCL). | In April, the most popular stock on Robinhood was Aurora Cannabis (NYSE: ACB). Robinhood boasts a staggering 13 million accounts, but a great many of those accounts are used by younger people. Keeping the math straight with 13 million users, that would give Robinhood's community of retail investors a capitalization of $65 billion on the high end of the spectrum. |
37399.0 | 2020-06-21 00:00:00 UTC | Better Marijuana Stock: Aurora Cannabis vs. Cresco Labs | ACB | https://www.nasdaq.com/articles/better-marijuana-stock%3A-aurora-cannabis-vs.-cresco-labs-2020-06-21 | nan | nan | This year has already been a study in contrasts for Aurora Cannabis (NYSE: ACB) and Cresco Labs (OTC: CRLBF). By the end of March, both cannabis companies had seen their valuations more than halved. But since April, shares of both Aurora and Cresco have soared.
Cresco Labs has been the bigger winner in recent months. But which of these marijuana stocks is the better pick for long-term investors? | This year has already been a study in contrasts for Aurora Cannabis (NYSE: ACB) and Cresco Labs (OTC: CRLBF). By the end of March, both cannabis companies had seen their valuations more than halved. Cresco Labs has been the bigger winner in recent months. | This year has already been a study in contrasts for Aurora Cannabis (NYSE: ACB) and Cresco Labs (OTC: CRLBF). But since April, shares of both Aurora and Cresco have soared. Cresco Labs has been the bigger winner in recent months. | This year has already been a study in contrasts for Aurora Cannabis (NYSE: ACB) and Cresco Labs (OTC: CRLBF). Cresco Labs has been the bigger winner in recent months. But which of these marijuana stocks is the better pick for long-term investors? | This year has already been a study in contrasts for Aurora Cannabis (NYSE: ACB) and Cresco Labs (OTC: CRLBF). By the end of March, both cannabis companies had seen their valuations more than halved. But since April, shares of both Aurora and Cresco have soared. |
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