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Aurora Cannabis (TSX: ACB) (Nasdaq: ACB) came under heavy pressure after the closing of its 200 acre outdoor cultivation facility in British Columbia was reported.
During the last two years, the Canadian Licensed Producer (LP) closed several cultivation and production facilities in Canada and abroad as part of an effort to lower costs and achieve profitability.
Following Aurora’s acquisition of Reliva, we became increasingly concerned about the future of the business. From closing production facilities to hiring a new leadership team, the last few years have been more than challenging for the company and we continue to have a cautious outlook on it.
When it comes to capitalizing on the cannabis industry in the United States (US), we do not consider the acquisition of Reliva to be a strategic approach to having leverage to it. We believe the new management team has dropped the ball on several major growth projects and has failed to execute on a multi-national growth strategy.
The last few quarters have been ugly for Aurora Cannabis and we expect this trend to continue in future quarters. We believe the business does not have the resources to capitalize on emerging markets and are of the opinion that the market has lost faith in it.
Although Aurora Cannabis’ stock has been under considerable pressure, we continue to believe the risk exceeds the potential reward. Going forward, we expect the Canadian LP to have a tough time when it needs to raise capital and believe further dilution is a certainty. We prefer other Canadian LPs to Aurora Cannabis and will continue to monitor how the business performs.
If you are interested in learning more about Aurora Cannabis, please email support@technical420.com with the subject “Aurora Cannabis” to be added to our distribution list.
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