Aurora Cannabis Inc (TSX:ACB)(NYSE:ACB) has been struggling this year, to put it lightly. In just the past three months, the stock has lost more than 36% of its value.
And with the company missing its own forecasts in its most recent earnings report, things have just gone from bad to worse for the stock. Although it’s still producing significant sales and nearly hit the $100 million mark during the quarter, there are some big problems on its financials.
The company has posted an operating loss of more than $50 million in each of the past four quarters. Although other income helped bumped the company near breakeven, the reality is that it needs to be profitable at the operational level in what it does on a day-to-day basis. That also points to another big problem: cash flow.
The company has consistently used millions of dollars to fund its operating activities. And while this past quarter it ‘only’ burned through $4.6 million in cash from its operating activities, it also had capital expenditures totaling more than $167 million.
These are concerning numbers because the end result is Aurora is going to have to end up raising more cash. And with the share price falling, using equity issues to do so could cripple the price even further.
It’s a trouble situation for Aurora and that’s why it may not be surprising if the stock continues to struggle. Investors are looking for more stability from pot stocks, and a lack of profitability has led to a big selloff of Aurora and many of its peers. While the stock is at a very low price, it’s still not an investment I’d make today.
