Whatever you think about Dogecoin (CRYPTO:DOGE), it’s been a huge winner this year. The price of the popular cryptocurrency has skyrocketed more than 6,400%. That return trounces even the best-performing stocks that are currently popular on Robinhood…
But Dogecoin proponents and opponents alike would also probably agree that the cryptocurrency is risky. Some traders who bought at the peak price a few weeks ago are now sitting on a 45% loss.
This cryptocurrency isn’t the only investment alternative that exposes buyers to the potential for huge losses, though. Here’s one popular Robinhood stock that could be even riskier than Dogecoin.
A shadow of its former self
At least one of the most widely held stocks among Robinhood investors has fallen harder this year than Dogecoin. Aurora Cannabis (NASDAQ:ACB) shares currently trade at more than 50% below its peak level set in February.
However, the full story is much worse for Aurora. The marijuana stock has lost more than 90% of its value since early 2018.
At one point, Aurora ranked as the biggest cannabis producer in the world based on market cap. Reports even surfaced that Coca-Cola was considering teaming up with the company to develop cannabis-infused beverages. All of that seems like ancient history now, though.
While several of its rivals in the Canadian cannabis market landed big partners, Aurora has yet to strike a deal with a major player in the consumer packaged goods industry. And the company isn’t anywhere close to being the biggest cannabis producer in the world now. It barely makes the top five among Canadian companies and could easily lose its spot among the top 10 biggest North American cannabis companies.
What makes Aurora so risky
You could make the argument, though, that Aurora is actually less risky now that it’s only a shadow of its former self. To some degree, that’s true. However, there are still several major risks that the company faces.
Aurora’s biggest problem is that it continues to lose a lot of money. In the company’s third-quarter results announced in May, Aurora posted a net loss from continuing operations of $165.7 million Canadian. In the past, Aurora has stated that it was on track to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). That goal still hasn’t been met.
Because it remains unprofitable, Aurora has to resort to stock offerings to raise more cash. These offerings, though, cause dilution in the value of existing shares. Less than a week after reporting its Q3 results, Aurora filed a prospectus supplement that set up a new at-the-market equity program. This program allows the company to sell up to $300 million of shares. More dilution is on the way.
Aurora’s situation would be better if…
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