MarketWatch 22 September 2020
Our additional comment: Not such a profitable business as they try to pretend – because the black market doesn’t go away…
“One of the biggest problems for Aurora had been its focus on premium cannabis that costs more to consumers, a strategy that fell apart as Canadian consumers sought the cheapest buzz for the buck. Aurora has pivoted to selling cheaper pot, but that has hit its margins and revenue totals.”
Aurora Cannabis Inc. lost more than C$3.3 billion, about $2.5 billion, in its recently completed fiscal year, and predicted softer sales than expected at the outset of its new year Tuesday, sending shares down roughly 10% in after-hours trading.
Aurora ACB, -2.88% ACB, -1.88% reported fiscal fourth-quarter losses of C$1.86 billion on sales of C$72.1 million on Tuesday, a decline from a break-even quarter with sales of C$98.9 million in the same period a year ago. Aurora did not provide a per-share loss calculation. Analysts on average expected losses of 66 cents a share on sales of C$73.2 million, according to FactSet.
Shares dove 10% in after-hours trading immediately following release of the results, adding to the roller-coaster ride Aurora investors have experienced in the past year. Aurora’s stock shot up 15.8% in Tuesday’s regular session, after falling 45% since record gains in the wake of the company’s previous earnings report.
Part of the decline in recent months stemmed from Aurora’s admission earlier this month that it would take an impairment charge of roughly C$1.8 billion in this earnings report largely related to goodwill charges for previous acquisitions. In that same announcement, Aurora announced its third chief executive of 2020, Miguel Martin, who replaced interim CEO Michael Singer after Singer took over for the departed Terry Booth in February. The company also guided for fourth-quarter revenue of C$70 million to C$72 million.
One of the biggest problems for Aurora had been its focus on premium cannabis that costs more to consumers, a strategy that fell apart as Canadian consumers sought the cheapest buzz for the buck. Aurora has pivoted to selling cheaper pot, but that has hit its margins and revenue totals.
“Total volume of dried consumer cannabis sold increased by 36%, but was offset by a 30% decrease in the average net selling price per gram of consumer cannabis as the Company’s value segment brand, Daily Special, accounted for a greater percentage of consumer cannabis net revenue, at 62% of flower revenue compared to 35% in the prior quarter,” Aurora disclosed in Tuesday’s announcement.
READ MORE: https://www.marketwatch.com/story/aurora-cannabis-lost-more-than-c-3-billion-in-a-chaotic-year-and-the-stock-is-falling-11600808375