Since Aurora Cannabis (ACB) announced its most recent earnings, the stock has been moving lower. Shares of the Canadian cannabis producer have lost almost 50% of their value in just a few weeks…
A couple of days ago, the company added more kindle to the fire by revealing it has been burning through its cash faster than it had anticipated and will need to raise an additional $500 million over the next 25 months.
Management said in a press release on Tuesday that it only had $272 million left in proceeds from its at-the-market (ATM) program. This means that the company has used what was left of the $183M equity facility in the last 30 days. Now the company is proposing to sell $500 million of common shares, preferred shares, warrants, subscription receipts and debt securities.
Pablo Zuanic, an analyst at Cantor Fitzgerald who had previously remained optimistic on ACB despite their ongoing struggles, cut his estimates. Zuanic lowered his 12-month price target on ACB to just $7 from a staggering $18. He also reduced his rating from “overweight” to “neutral” while calling the news on Tuesday “contrary to expectations and guidance.”
I was surprised Zuanic kept his overweight rating over the past month, as ACB announced a string of bad news which included the departure of Nelson Peltz. Zuanic stated that the downgrade was long overdue.
Owen Bennett, an analyst from Jefferies, said, “It’s unsurprising the company is looking to raise funds.” He also stated that, “Even if Aurora hit its latest target of achieving positive EBITDA in fiscal 2021, the company was at risk of under-investing in the business without raising additional funds.”
Bennet noted on Monday that…
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