This story was originally published here.
It’s still one of the “100 Most Popular” stocks on Robinhood, but Aurora Cannabis Inc. (NYSE: ACB) is in trouble.
In the last 52 weeks, the ACB stock price traded as high as $10.32 per share.
Now, it’s trading near its lows of $0.63.
And while Aurora was never in any of our model portfolios, we know a lot of our members own ACB and want to know what’s going to happen next.
Today, we’re going to take a look at how the company got in this position, as well as what shareholders need to do right now.
What Happened to Aurora
Aurora had a lot of promise coming out of the gate.
It was aggressively investing for growth and, by 2018, had become the second-largest cannabis company by market cap.
By 2019, that narrative completely changed. Oversupply in Canada’s medical marijuana market and a lack of dispensaries throughout Canada created a massive bottleneck for the entire industry. Aurora simply couldn’t sell enough products and, without a steady revenue stream, its large, strategic investments became major drags on the bottom line.
Aurora’s most recent earnings report did nothing to inspire buyers, either.
Executives reported a total net loss of $981 million on its February call. On top of that, Aurora announced it would cut its staff by 500 positions and reduced its forward revenue guidance by 31%.
The “Cannabis 2.0” movement in Canada, which opened the door for edible and vape sales, was expected to significantly bolster Aurora’s revenue last year. But domestic medical sales proved to be flat year-over-year at best.
International sales are struggling, too. In-roads to Europe are a growth mechanism for many cannabis companies, but Aurora continues to struggle to market its products and convert people into customers in Europe.
Aurora’s Identity Crisis
Ultimately, the root of Aurora’s problems can be chalked up to a lack of identity and poor positioning.
Aurora is a medical marijuana producer with no apparent plans to pivot towards recreational products anytime soon. Its product line is robust, but the strains and oils it offers, while tested and vetted as required by law, are essentially the same strains, tinctures and oils folks use recreationally.
So, those products can be purchased at any dispensary.
And because it hasn’t formed a clear identity, Aurora operates much more like a nutraceutical company than a biotech firm. For example, GW Pharmaceuticals (Nasdaq: GWPH), maker of Epidiolex, the first FDA-approved cannabis-derived drug on the market.
Pivoting to recreational sales could help with the company’s identity problem, but there is even more competition in that sector than ever before.
For the year, the company is down over 66%, as of midday Monday, March 16. One-year losses are even more acute at over 92%.
It’s tempting to take a contrarian mindset when analyzing Aurora shares, but there are too many headwinds afflicting this company.
And there’s a big, looming problem.
The Potential to Delist
As the stock price keeps dropping, there is the chance Aurora will delist from the NYSE. That means it does not meet the requirements needed to be traded on the major exchange.
When that happens, trading will have to occur in the OTC markets.
That delisting will shake the confidence of many investors, making it harder for you to sell your shares.
If you still have any skin in the game with Aurora, now is the time to bail, cut your losses, and reposition that money elsewhere into opportunities with much better profit potential – opportunities like special-purpose acquisition companies (SPACs), top-tier companies with beaten down stock prices, and Reg CF deals.
Still Plenty of Opportunity in Cannabis Investing
Joe Montana, for example, is still a believer in the industry.
He's backed some of the most successful startups in the world – investing in companies like Dropbox and Pinterest long before they became the giants they are today.
But even with those billion-dollar companies in Joe Montana's portfolio…
He says the cannabis industry has as much potential than anything he's seen in a while.
“It is a great time for investing in the cannabis industry,” he said. “The possibilities to get in on the ground floor of some great companies is very exciting for everyone.”
However, Joe is careful to say the normal rules of investing don't apply to the cannabis market.
“You can't use those old-fashioned metrics analysts tend to lean on. You need a different process.”
Joe wants to make sure Americans have all the information and tools they need to make smart investment decisions.
That's why he recently took part in the The 2020 American Cannabis Summit.
The summit is a gathering of the industry's top experts where they'll reveal the market's best wealth-building opportunities.
And Joe will even go over a unique formula for finding startups.
This online-only event is a must-watch for anyone who has ever considered investing in cannabis.