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Wednesday, December 2, 2020

Aurora Cannabis Inc (OTCMKTS:ACBFF) Clears a Major Technical Hurdle

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Last week, we suggested that Aurora Cannabis Inc (OTCMKTS:ACBFF) had put in a key low and that an important bounce was underway. The technical hurdle was clearly at the $5/share level. Well, it got over that hump on Monday in a big way, vaulting almost 20% high in a move partially pushed by news that, in connection with the spin-out of its subsidiary Australis Capital Inc., Aurora has now officially set Friday, August 24, 2018, as the record date for the distribution of Australis units.

“There is massive demand for additional capital to fuel the growth of the U.S. cannabis industry, as well as intense interest among investors to gain access to the American market. We are very pleased to have created this opportunity for Aurora’s shareholders,” said Terry Booth, CEO of Aurora. “The unparalleled access to numerous compelling business opportunities in the U.S. positions Australis well to generate significant shareholder value.”

Aurora Cannabis Inc (OTCMKTS:ACBFF) bills itself as 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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Traders will note 31% tacked on to share pricing for the listing in the past week, a rally that has pushed up against longer standing distributive pressure in the stock. Moreover, the company has seen interest climb, with an increase in recent trading volume of nearly 120% over what the stock has registered over the longer term.

Scott Dowty, CEO of Australis, added, “We are well capitalized through our oversubscribed initial non-brokered private placement to execute on our investment strategy in the cannabis industry. The undercapitalized and fragmented nature of the U.S. cannabis industry creates ample opportunities for Australis to leverage its access to capital and secure attractively valued assets. Our teams have already begun evaluating several opportunities, and we are looking forward to responsible and sound execution post completion of the Distribution. We look forward to informing our shareholders and the market in this regard.”

Earning a current market cap value of $2.79B, ACBFF has a significant war chest ($231M) of cash on the books, which stands against 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%. As more color becomes clear on the name, we will review the situation and update our take. 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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