With over 170,000 confirmed cases around the world, the World Health Organization has officially declared the coronavirus a pandemic. This virus is affecting several things and parts of the world today from recreational to physical and even financial.
Events, seminars, and other gatherings are being canceled in fear of the virus spreading. Institutions, organizations, and individuals have cut down on their contact with people and certain products/services.
This forces a chain reaction where several events spiral into each other. As a result of the virus, stock markets all around the world are plummeting like a three-ton boulder dropped from a plane. With no cure for the virus in sight, there is a chance that things might just keep getting worse, and the stock markets will continue to suffer.
Cannabis stocks are not immune to this sell-off, including Aurora Cannabis (ACB). For the past couple of months, this cannabis giant’s stock has been in free fall. So much so that their price has dropped to under a dollar.
So is now a good time to buy Aurora Cannabis?
In the first half of 2019, more than a dozen cannabis stocks saw a 70% rise, including ACB. However, since then, their stock has fallen 87%.
It may seem like a good idea to buy ACB considering how low the prices are currently. However, we don’t think so.
In ACB’s last earnings report, they had a total net loss of about $981 million. This was a terrible number and remember – this was their losses BEFORE the coronavirus.
It also seems like ACB hasn’t been able to fully take advantage of cannabis 2.0 in Canada. This new wave of legal cannabis products should potentially give ACB the chance to earn a higher income. As of June 2019, more than 350,000 people had registered for legal cannabis products. However, ACB has only been able to get 25% of the market.
Additionally, there is a major issue concerning their listing on the New York Stock Exchange (NYSE) now that the stock is under $1. Trading over the $1 level is essential for ACB because in order to stay on the NYSE, the rules indicate, “The U.S. stock market requires the closing price of a listed company’s common shares to be at least $1 per share over 30 consecutive days.” After the company’s stock sank below $1 the firm has 6 months to meet these requirements, otherwise the stock is delisted.
For these reasons, I don’t believe now is a smart time to buy shares of ACB, even with shares at such a low price. I believe other cannabis companies like OrganiGram (OGI) are a much safer investment.