Catastrophic Results For Aurora.
Aurora, one of the leading cannabis businesses in Canada, has just published catastrophic results for the second quarter of 2021. With a turnover 21% lower than the same period last year, the Edmonton company lost $24 million in three months.
The financial situation isn’t new. “Last spring, the company almost got bankrupt,” recalls Antoine Quesnel, a French investor specializing in the Canadian cannabis market. They had to do a dilution, which is to say, divide the price of their shares by 12. When a company does that, it’s bloodshed. Since then, their stock market curve has been flat: no one wants to invest in them anymore.”
Despite its difficulties, Aurora has a strong suit: medical cannabis. Number one in the Canadian market, the company exploded its results in March 2021. It’s a different story for recreational cannabis. Sales fell 37% compared to the previous quarter.
Specialists recommend Aurora to focus only on medical cannabis.
“Given the poor results in recreational sales, the company could become stronger with a growing medical market, where Aurora maintains its leading position,” said Pablo Zuanic, an analyst for investment bank Cantor Fitzgerald.
According to this investor, Aurora must go upmarket to save the company. “Their competitors make better cannabis; without a doubt! I see a lot of comments on Canadian specialized forums, where the opinions are negative. And the photos do not make you want to buy their products. “
The reality is that the Canadian marker favors small local producers rather than giants like Aurora, Tilray, or CanopyGrowth.
We’ll keep an eye on the upcoming moves from Aurora, and as usual, we’ll let you know. Stay tuned!