Aurora Cannabis Stock Has Further to Fall

奥罗拉(Aurora) Cannabis 股票进一步下跌

2019-09-23 22:01:09 InvestorPlace


It would seem like at some point the Aurora Cannabis stock price has to stabilize. Aurora Cannabis stock has lost half its value just since March. On the Toronto Stock Exchange, ACB now trades back where it did in late 2017. Source: Shutterstock But the bottom hasn’t come in yet — and it may not for a while. Admittedly, I have thought there has been an occasionally intriguing bull case for Aurora Cannabis stock. The company has the largest global reach in the industry. Valuation on a revenue basis has come in. Both recreational and medical marijuana, despite near-term worries, still should see growth over time. But the company’s fourth-quarter earnings report this month significantly undercuts the bull case. It reverses what looked like two pieces of good news heading into the release. And while the ACB stock price might be cheaper, it’s certainly not cheap. This still is an unprofitable company with over a billion shares outstanding and a market capitalization over $5 billion. It can get worse. InvestorPlace - Stock Market News, Stock Advice & Trading Tips On its face, Aurora Cannabis earnings actually look reasonably strong. Revenue increased 52% quarter-over-quarter, with net cannabis revenue up 61%. Notably, gross margins expanded, an accomplishment other producers (notably Canopy Growth (NYSE:CGC)) haven’t been able to match. Adjusted EBITDA was negative, but the loss narrowed sharply against the third quarter. And, here, too, most major players are in a similar spot, with Aphria (NYSE:APHA) a notable exception. But Aurora Cannabis missed expectations, and not just in terms of Wall Street. It missed its own revenue guidance. That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended. To be fair, the company’s Chief Corporate Officer Cam Battley told Yahoo! Finance that the company did meet its cannabis revenue outlook. The miss came in so-called ancillary revenue. But he also admitted that management was “red-faced” and said on the Q4 conference call that the miss “shouldn’t have happened.” In this environment, that type of miss will be punished, and it explains in part why the ACB stock price fell after the report. But there’s a long-term problem here, too. After all, Aurora Cannabis is probably executing the trickiest strategy of any of the major cannabis plays. It has operations in 25 countries on five continents, per its most recent investor presentation. The company is integrating numerous acquisitions. Unlike Hexo (NYSE:HEXO) or even cash-rich Cronos (NASDAQ:CRON), it’s aiming for breadth rather than focus. It’s a difficult strategy, even if it makes sense in theory. But it’s a tough strategy in which to have confidence when the company can’t guide correctly a full five weeks after the end of a quarter. Aurora missed expectations on another key front. On the Q3 conference call, Battley said the company was “tracking for positive EBITDA” in the fourth quarter. That didn’t happen. Aurora Cannabis lost over $11 million even on that basis. The company blamed the slow pace of retail rollouts — but that alone doesn’t seem a sufficient explanation. In May, at the time of the Q3 call, Aurora already was two weeks into Q4 and should have had a reasonable idea of the regulatory roadblocks in Canada. But there’s a bigger issue: There was a growing worry this summer that Aurora was going to need additional financing. As I detailed in July, the falling ACB stock price meant convertible debt would need to be repaid in cash. That in turn suggested that the company might need to sell stock. That dilution, on top of a share count already above 1 billion, would add further pressure on Aurora Cannabis stock. A couple of weeks later, ACB upsized its credit facility. That seemed to assuage the dilution concern. It gave the company room to pay off its debt and invest behind the business — assuming free cash flow turned positive. That assumption no longer holds. As a Stifel analyst detailed in downgrading ACB stock, Aurora Cannabis has significant cash needs in the coming quarters. It’s going to be very difficult to raise more debt, which leaves the option of selling stock at already depressed prices. The broader point is that Q4 earnings mattered — and not in a good way. The sell-off in ACB after the report isn’t knee-jerk. It isn’t just part of the wider weakness in cannabis stocks. In fact, the sell-off isn’t even necessarily short-sighted. Aurora Cannabis has significantly damaged investor confidence, and it will take time and success for the company to win it back. As of this writing, Vince Martin has no positions in any securities mentioned.
看来在某个时刻,奥罗拉·坎纳比斯的股价必须稳定下来。奥罗拉(Aurora) Cannabis 股票自3月以来已经贬值了一半。在多伦多证券交易所( TorontoStockExchange ), ACB 现在的股价回到了2017年末的水平。 资料来源: Shutterstock 但底部还没有出现——可能不会持续一段时间。诚然,我认为奥罗拉·坎纳比斯的股票偶尔会有一个有趣的牛市。该公司在该行业拥有全球最大的影响力。以收入为基础的估值已经出现。尽管近期市场担忧,但娱乐和医用大麻仍应随着时间的推移而增长。 但该公司本月发布的第四季度盈利报告大大低于牛市。它将看起来像两条好消息的内容转换成新闻稿。虽然 ACB 的股价可能更便宜,但肯定不便宜。这仍然是一家无利可图的公司,发行了超过10亿股股票,市值超过50亿美元。它可能变得更糟。 投资场所-股票市场新闻、股票咨询和交易提示 从表面上看,奥罗拉(Aurora) Cannabis 的收益看起来相当强劲。收入同比增长52%,大麻净收入增长61%。值得注意的是,毛利率上升,其他生产商(尤其是 Canopy Growth ( NYSE : CGC ))的业绩未能与之匹敌。 调整后的 EBITDA 为负,但亏损较第三季度大幅收窄。而且,在这里,大多数主要的球员也在一个类似的位置,阿皮里亚(纽约证券交易所: APHA )是一个明显的例外。 但奥罗拉•坎纳比斯( Aurora Cannabis )没有达到预期,而不仅仅是华尔街。它错过了自己的收入指引。这一指导方针——实际上是初步的结果——仅仅是一个月前发布的,也是本季度结束后一个多月发布的。 公平地说,公司的首席执行官 Cam Battley 告诉雅虎!财务方面,该公司确实满足了大麻的收入预期。这次失误带来了所谓的辅助收入。但他也承认,管理层“脸红”,并在第四季度电话会议上表示,这一失误“不应该发生”。 在这种环境下,这类失误将受到惩罚,并在一定程度上解释了为什么 ACB 股价在报告之后下跌。但这里也存在一个长期问题。 毕竟,奥罗拉·坎纳比斯可能正在执行任何大型大麻戏剧中最棘手的策略。根据最近的投资者介绍,该公司在五大洲的25个国家开展业务。该公司正在整合大量收购。与 Hexo ( NYSE : HEXO )甚至现金充裕的 Cronos ( NASDAQ : CRON )不同,它的目标是广度,而不是专注。 这是一个困难的策略,即使它在理论上是合理的。但当公司无法在季度结束后整整五周的时间里正确地指引方向时,要有信心,这是一项艰难的战略。 奥罗拉(Aurora)错过了另一个关键方面的期望。在第三季度电话会议上,巴特利表示,该公司正在第四季度“追踪积极的 EBITDA ”。 这并没有发生。即便如此,奥罗拉·坎纳比斯也损失了1100万美元。该公司将零售推广步伐缓慢归咎于此,但仅此一点似乎并不足以解释。今年5月,在第三季度电话会议上,奥罗拉(Aurora)已经进入第四季度两周,应该对加拿大的监管障碍有一个合理的认识。 但还有一个更大的问题:今年夏天,人们越来越担心奥罗拉(Aurora)需要更多的资金。正如我在7月详述的那样, ACB 股价下跌意味着可转换债券将需要以现金偿还。这反过来意味着公司可能需要出售股票。这种稀释,加上已超过10亿股,将进一步增加奥罗拉(Aurora) Cannabis 股票的压力。 几周后, ACB 扩大了信贷服务。这似乎减轻了人们对股权稀释的担忧。假设自由现金流转为正数,它给了公司偿还债务和投资业务的空间。 这种假设不再成立。作为 Stifel 的分析师,奥罗拉(Aurora) Cannabis 在未来几个季度有大量现金需求。要筹集更多的债务将是非常困难的,这使得以本已低迷的价格出售股票的选择成为可能。 更广泛的观点是,第四季度的盈利很重要,而不是很好。该报告公布后, ACB 的抛售并不令人感到意外。这不仅仅是大麻库存整体疲软的一部分。事实上,抛售并不一定是目光短浅。奥罗拉•坎纳比斯(奥罗拉(Aurora) Cannabis )严重损害了投资者的信心,公司要想重新赢得信心,需要时间和成功。 截至本文撰写之日, Vince Martin 在上述任何证券中都没有任何头寸。