Aurora Cannabis Inc (TSX:ACB)(NYSE:ACB) has been struggling recently and in just six months, the pot stock has seen half of its valuation get wiped out.
Although cannabis stocks in general haven’t been performing well, Aurora has definitely been on one of the bigger declines as of late. At $6.02 as of Thursday’s close, the stock still has a long way to go to hit its 52-week low of $5.05.
However, it has recently come out of oversold territory with its Relative Strength Index now at over 36 and the stock showing some signs of life in the past few days.
But it may be short-lived as scandals have rocked the cannabis industry of late and with Aurora underwhelming investors with its most recent quarterly results, it’s created a perfect storm that has sent the stock reeling.
The challenge for investors is that it’s hard to assess whether the stock will rebound or if this is part of a much larger correction. At a price-to-sales ratio of less than 25, it’s definitely a lot cheaper than where the stock was valued at several months ago.
However, with investors worried about a possible recession and the markets showing some hesitance towards not just pot stocks but growth stocks as well, it could be a sign that investors aren’t willing to value Aurora and its peers as highly anymore.
But there’s a lot of potential for Aurora to recover and rally from where it is today as it may just be a bump in the road. There has been a lot of volatility when it comes to cannabis over the past few years, and I wouldn’t be surprised if the stock bounces back at some point.
