Aurora Stock (ACB Stock) just crashed by 36%. Will Aurora Stock go Bankrupt in 2020? In this Aurora Stock ACB Stock Analysis Video, we will discuss the possibility of bankruptcy with Aurora. I will also disclose if I plan to buy Aurora Stock at these prices so make sure to watch the whole video. Like Challenge: 500 LIKES
If we get 500 likes on this video, I will make an analysis video on other stocks in this sector as well. Make sure to comment to let me know what stock analysis you want to see next.
A lot of this stock crash is due to their earnings which they announced last week - leading to a lot of investors selling the stock on reports of continued losses. This weakness in the stock isn't just seen from their most recent earnings - in fact, from the stocks high earlier this year - we're sitting over 77% lower. So this begs the question - is Aurora Stock a BUY currently? Or, is Aurora Stock headed for even lower prices and potentially facing bankruptcy?
In Q1 of their FY2020, ACB Stock reported revenue of $70.8M, which was down QoQ from $94.6M. This is a steep 25% decline QoQ, which raises concerns on whether investors may have been a bit too optimistic here on their growth potential. Looking further, the other concerning number was that Consumer revenue, through non-wholesale methods, was down 33% - which is a drastic drop in sales. Production volume increased by 43%, to over 41.4K kg, Gross profit for the Q was $53.7M with 58% margins, and their medical patient base expanded 8% to 91,116 patients. So it's kind of a mixed bag here - but I would say the negatives still heavily outweigh the positives in this case.
Looking at the general overview of the balance sheet, we saw a huge 46% decline in working capital as they continue to invest into the business. I also see their huge inventory as a negative - and that's because if they have trouble selling what they have, having massive inventory is useless and I would actually see this as a big liability - especially with products that have a shelf life to them. A couple other negatives were that even though their medical revenues increased, the ASP decreased - so longer term this may end up hurting them as well. KG produced increased substantially, but then KG sold decreased substantially so we may be seeing a situation here where there's too much supply and not enough demand - bringing us back to the inventory levels rising. In an ideal world, we want to see both these numbers trending higher - implying that demand is strong, so they need to keep producing to meet demand.
The last thing from the reported numbers was of course their losses - which IMO was a big contributor to the stock price crashing as well. Adjusted EBITDA loss was $39.7 million in Q1 2020 - which was much more than the quarter before, and they use a word investors hate - uncertainty. There's uncertainty in when this will turn around, as they continue to face short term headwinds, so the near future looks anything but bright for this company.
Now a piece of good news did come out in their outlook statement, where they mention that version 2.0 of regulation in Canada came into effect Oct 17th, meaning they can now sell much more profitable products like vape pens, edibles, and other derivatives as well - implying that they expect the profits here to help in the next Q.
So am I buying ACB Stock on 2020? Even with current prices near $2/share, I still believe Aurora Stock is overvalued and could drop much lower. To see more, watch the video where I go over my full reasoning and thoughts on this, and remember, if we get 500 likes I will disclose the stock I hold in this sector!
#ACB #Aurora #PositiveInvesting
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