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Monday, November 30, 2020

Where to Next for Aurora Cannabis Inc (OTCMKTS:ACBFF)?

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Unless you’ve been living under a rock, you have watched Aurora Cannabis Inc (OTCMKTS:ACBFF) persistently weaken and take out key support at the $5/share level. If we see further downside, then the next key level should be right around the $4/share level, where we saw a spike low and rebound in November 2017.

The company just announced that it has reached a license agreement with Alcanna Inc. (TSX: CLIQ) whereby Alcanna has been given exclusive rights to open retail cannabis stores under the brand name “Aurora” across Canada. According to the release, “Alcanna’s position as the biggest private sector liquor retailer in Canada, aligns with Aurora’s position as one of the world’s leading cannabis companies.”

Aurora Cannabis Inc (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.

ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.

According to company materials, “Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations. The Company operates a 55,200 square foot, state-of-the-art facility in Mountain View County, Alberta, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third a 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Germany.”

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As noted above, the stock has been pressing lower following a break of important support. Recent action has seen -8% stripped out of share values of the company over the past week of action. What’s more, the stock has seen a growing influx of trading interest, with the stock’s recent average trading volume running 15% over what the stock has registered over the longer term.

“This Agreement between Aurora and Alcanna, combining physical presence, retail experience, capacity and expertise with our brand strength, product know-how and deep data, creates a significant competitive advantage that will allow for the rapid development of a robust retail network in Alberta, and any other jurisdiction that permits private retail of cannabis for adult consumer use,” said Aurora CEO Terry Booth. “We have collaborated on store design and layout to ensure the ultimate customer-focused experience, based on a broad selection of products that we anticipate will resonate strongly with the adult consumer use market.”

Now commanding a market cap of $2.6B, ACBFF has a significant war chest ($231M) of cash on the books, which compares with about $2.6M in total current liabilities. One should also note that debt has been growing over recent quarters. ACBFF is pulling in trailing 12-month revenues of $42M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 211.1%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.

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