Aurora Cannabis Stock Fell 30% to All-time Low on Slowing Revenues
Aurora Cannabis stock price hit an all-time low despite beating fourth-quarter results. Investors reacted strongly to declining revenues as their consumer cannabis sales dropped almost 9% from the past year period and the company sees an extension of the declining trend in the first quarter this year.
On the positive side, the company has been successfully slashing its production and operational costs to move towards profitability. The company expects to generate positive adjusted EBITDA in the second quarter of 2021.
Aurora Cannabis stock price lost close to 90% of value in the past twelve months. Its shares fell almost 30% on fourth-quarter earnings announcement. The shares are currently trading around an all-time low of $5.
Although its fourth-quarter revenue of $72.3 million topped analysts’ consensus estimate by $0.62 million, the revenue fell more than 5% from the year-ago period. Its medical cannabis revenue of $32 million grew 4% from the past year period.
Despite slowing revenues, the company has been actively working on improving its operational efficiencies. Consequently, its Non-GAAP EBITDA declined to negative $34.6 million, well below from the previous quarter loss of $50.4 million.
“Our Q4 demonstrated progress in the rationalization of SG&A and cash burn along with continued leadership in both Canadian and international medical. However, Aurora has slipped from its top position in Canadian consumer, a market that continues to support material growth and opportunity,” stated Miguel Martin, recently appointed Chief Executive Officer of Aurora.
The market analysts came up with a mixed opinion over the future fundamentals of Aurora Cannabis. For instance, MKM Partners’ Bill Kirk said the company should low its production capacity to meet with demand and drop its cost structure.
Eight Capital’s Graeme Kreindler says the focus on expanding the market share looks like a good strategy but the company also needs to improve its operational execution to achieve positive EBITDA.