Aurora Cannabis (TSX:ACB)(NYSE:ACB) stock has plunged 23.6% month-over-month as of close on November 22. The stock is now down 47.2% in 2019 so far. Aurora capped off the calendar year with an earnings report that disappointed analysts.
The report was not without bright spots, as the company did post an industry-leading gross profit of $53.7 million, which was up 58% from the prior year. Unfortunately, adjusted EBITDA came in at a negative $39.7 million for the period ending September 30, 2019. This was down from the negative $26.6 million in adjusted EBITDA it posted in the prior year.
Sales in the Canadian recreational market dropped 33% to $30 million.
Aurora has been outspoken in its criticism of provincial governments in their execution of cannabis legalization. Indeed, the market has been plagued by a faint retail footprint. The black market has continued to draw away consumers and the biggest producers are suffering.
Worse yet, Aurora announced that it would scale back the development of its cultivation footprint. The company will cease construction activity at its Nordic 2 facility in Denmark which will save approximately $80 million over the next year. It will also defer construction at its Aurora Sun facility in Medicine Hat.
Aurora is facing an uphill battle in reaching profitability, and management seems to be ceding ground to conserve cash. This is the right move in the long run, but it may not reward shareholders in the near term.
Shares moved into technically oversold territory following its earnings release, but buying the dip now should be seen as a long-term play as the Canadian cannabis industry works out major kinks in these early goings.
Related Stories
