After falling on hard times, Aurora Cannabis might be in a great position to make a rebound
Most cannabis ventures had a difficult year last year, but some ventures weren’t able to handle the crisis as good as others, leading to heavier financial problems. The case of Aurora Cannabis is an example of perseverance and, in a matter of months, it went from a company on the verge of bankruptcy to one on the rise. This Canadian company has made significant changes to its structure and has reduced operating costs in a way that could soon lead it to real profits. Now showing signs of renewed life, it might be worth a look as an investment target.
The biggest obstacles still faced by most companies in the cannabis market are the changes in valuation and unpredictable industry shifts that are still common in a sector that hasn’t reached maturity yet. To start changing things, Aurora focused on building production capacity and restructuring its business with the goal of a massive global operation. Now, it has switched to more realistic grounds like the US, Canada and possibly Germany, for now.
Another great opportunity for considering Aurora is the fact that it has reduced its operational costs, which are now more logical and viable. There is a lot of room for growth in the Canadian market with the launch of Cannabis 2.0 and the gradual switch to a legal cannabis market. Before, the company had quarterly expenses for $74 million, and that doesn’t even include the $15 million in depreciation costs and the $20 million in share-based compensation. It has been able to cut its expenses almost in half, and its third- and fourth-quarter revenue predictions, provided by analysts, indicate an increase in sales of around 35%.
Finally, analysts forecast sales of $62 million for the quarter ending in September and $67 million in December, which puts Aurora on the track to get a positive EBITDA. The hope is that the market’s demand doesn’t suffer any dramatic changes.