Aurora reported earnings on 9/11/2019, and the numbers were strong, but the stock is down 10% on 9/12/22019. Why? Let's dig into the Q4 2019 results and highlights, then discuss why shares are lower. Is it a buy here?
I have been suggesting this stock since it was around $1 a share. Aurora Cannabis, stock ticker ACB, formerly stock ticker ACBFF. I bought this stock a few years ago for a cost basis of under $2 a share. I have sold profits along the way, but I still ave a sizable position that I intend to hold long term. The nice thing is that all of the shares I own are now house money. I’ve already cashed out my initial investment plus around 450% profit, so I have zero risk with my position at this point. With that said, I do think it’s easily a $10 stock with time, and it’s one that I see being around when the dust settles. Aurora was already a reputable medical marijuana company in Canada prior to recreation legalization, and they have grown enormously since.
Aurora has diversified itself geographically, by segment and by product, allowing it to reduce its risk exposure to recreational pot, which when demand is supplied in Canada, will cause enormous problems for the companies that don't have the alternative segments and markets Aurora does to supply.
The company easily has the largest number of markets it competes in globally, with a presence in 24 total countries. The company has also focused primarily on medical cannabis, which commands higher prices and margins, especially in Europe. While Aurora management has said it will continue to supply recreational pot for the Canadian market, it's not reliant upon it for long term growth. It has rapidly scaled its production capacity out while lowering costs, which will soon allow them to increase revenue while generating positive EBITDA. If you haven’t heard of Aurora Sky, it’s one of the largest largest marijuana grow facilities in the world. It’s an automated 800,000 square-foot plant in Alberta capable of producing 100,000 kilograms of cannabis annually. Based on an average size of 0.32 grams, that's about 313 million joints. Oh, and it’s located right next to the Edmonton International Airport, which is brilliant when you think about logistics and their global presence. In my opinion, Aurora will be the global marijuana leader, or at least one of the major players, in a couple of years. They have an outstanding CEO in Terry Booth, and they’ve simply made excellent strategic decisions time and time again. I’ve believed in Aurora for a long time, and they have exceeded my expectations to this point. If you don’t already own ACB, take a look, it’s something I’d want to own for the long haul.
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