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Why Aurora Cannabis has skyrocketed 42.9% in January – The Motley Fool



What happened

After the company opened initial sales for its second quarter on January 8, shares in Aurora Cannabis (NYSE: ACB) 42.9% last month, in S & P Global Market Intelligence.

So what

Aurora Cannabis is one of Canada's largest marijuana companies. An aggressive acquisition strategy has industry watchers thinking that annual marijuana production can climb nearly 700,000 kilos from 100,000 kilos today. Shortly before investors see the full benefit of the company's expansion plans, Aurora Cannabis sees that sales are growing due to its investments.

  A man in a suit sinking in the air while wearing a jetpack.

IMAGE SOURCE: GETTY IMAGES.

The company revealed results that were not allowed for the quarter of the calendar ending December 31 in early January. Quarterly results include first sale from Canada's recreational market, opened for business in mid-October.

According to Management, sales for the last quarter were between Canada's 50 million and 55 million dollars, from just CA $ 11.7 million last year. Acquisition includes, Aurora Cannabis's revenues of $ 91 million in the past quarter (its fiscal Q1), so the adult use market added CA $ 15 million to the sales in the first six weeks of its operation.

Aurora Cannabis also tells investors that its annual production capacity reaches 100,000 kilos, from 70,000 kilos in October, and is on track to increase production at an annual rate of 150,000 kilos before the end this quarter. The doubling of production over the past six months puts it in a perfect position to reduce further revenue growth while Canada's entertainment market is emerging.

Now what

Aurora Cannabis reports her finalized quarterly results tonight (February 11) after the closing bell. Its CEO, Terry Booth, plans to host a revenue conference call with investors at 6 hours. EST. During the call, investors want to pay particular attention to what he says about the company's production costs, since reducing the cost per gram is the key to making an operating income. Booth may also offer financial guidance and additional insight into how quickly Aurora will reach the current estimated target production of 570,000 kilos per year.

Canadians spend CA $ 6 billion annually in marijuana, according to Statistics Canada, so the sale of Aurora Cannabis climbs higher than this since revenues from the black market shift towards regulated markets of Canada. The global market opportunity can be more important to the future Aurora Cannabis, though. Throughout the world, marijuana spending is worth $ 150 billion a year, according to the United Nations, so the results of the last quarter could be the only end of the iceberg.

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the above mentioned companies. Motley Fool has no position in any of the stocks mentioned. Motley Fool has a disclosure policy.


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