Why Aurora cannabis stock is soaring 39% today


What happened

Actions of Aurora Cannabis (NYSE: ACB) As of 10:56 a.m. EDT on Friday, the numbers soared 39.2%. The huge gain came after Canadian cannabis producer announced better-than-expected third quarter fiscal 2020 results after the market closed on Thursday.

Aurora’s third quarter net revenues increased 18% from the previous quarter to C $ 78.4 million ($ 55.6 million), excluding provisions of C $ 2.9 million. This surpassed analysts’ average estimate for third quarter revenue by C $ 66.7 million.

Cannabis leaf with a green arrow pointing up and a stock market graph in the background

Image source: Getty Images.

So what

For months, most of Aurora’s news has been negative. Widespread revenue growth in the third quarter pleasantly surprised investors.

While Aurora’s surprisingly strong growth has received the most attention, there have been other positive stories in the company’s third quarter update. Perhaps most important was the significant reduction in Aurora’s cash consumption. During the third quarter, the company used C $ 118 million less in cash than the previous quarter.

This decrease in cash consumption should help Aurora reach its goal of generating positive adjusted profit before interest, taxes, depreciation and amortization (EBITDA). The company said it expects to meet this target in the quarter ending September 30, 2020.

Now what

The improvement in Aurora in the third quarter does not change the biggest problem for the company: it is still not profitable. The business will likely need more cash in the not too distant future. In the meantime, the marijuana stock will likely remain very volatile.


Please enter your comment!
Please enter your name here