The cannabis company may have slid downhill recently, but its future looks very bright
Canadian-based Aurora Cannabis was running deeper into the red until the company decided to make dramatic changes to ensure its survival. There were several factors that caused problems for Aurora; however, the major changes it has been undergoing recently are giving back hope to one of the leading cannabis stocks in the Canadian market. Regardless of what happened, Aurora continues to be a favorite for investors, and it is currently in 11th place among the most widely held stocks for Robinhood users. Traders and investors are viewing positively the strategy implemented by the cannabis producer, but, at this point, perhaps having a more careful approach will be better.
The company’s popularity is kind of a contrast to what the company’s current financial status is; since it became a publicly-traded stock, Aurora has lost 87% of its value. The main struggle Aurora is going through is that it does not have solid liquidity to back it up, but it does have a few long-term goals and convertible debt. In addition to that, Aurora is not yet profitable; it reported major losses in its latest financial report. This downward trend seems to be accelerating and Aurora reported a net loss of a little over $1 billion.
Besides that, the company’s plans to reduce its workforce might slow down operations. The company has cut nearly 25% of its administrative staff, including sales, and it announced a 30% reduction in its production staff. For a company that had just over 2,779 employees last year, cutting down more than 700 positions seems like a lot. This year’s production is quite complicated, as it has only harvested 36,000 kg of marijuana and it only sold 13,000 kg, which is like a tenth of Aurora’s projections in terms of demand.
Despite this, and looking at the long-term growth of the cannabis market, Aurora still has a lot of potential. If the industry grows as expected, it could easily rebound and return to being a leader in the cannabis space.