The Democratic win in the latest US elections and industry surveys have substantially resurrected the cannabis market, as a result of which shares of the Canadian company Aurora Cannabis Inc. (ACB) made an attempt to break through the threshold of resistance around $13, paving the door for them to hit the $19 mark reached in May 2020. The shares were worth more than $110 back in March 2019, but they have dramatically fallen in price over the ensuing years.
Recent revenue growth was announced by Aphria, a rival of Aurora Cannabis, but investors were also concerned: in the quarter ending in November, cannabis revenues grew by just 7 percent, which is considerably smaller than the estimates for the previous quarter when sales increased by 18 percent.
The growth of the Canadian cannabis market slowed to +8 percent in the fourth quarter of 2020, according to Hifyre analysis, while sales rose by 31 percent in the third quarter. Around the same time, the expense of ‘flowers’ dropped by 30% relative to the same quarter last year and by 6% compared to the third quarter of 2020. The cost of vapor cartridges, compared to the first quarter of 2020, decreased by 26%.
Thus, Aphria’s rise is due to the fact that the company’s report had positive figures for September and did not have poor figures for December. This benefit would not be granted to Aurora Cannabis, but their study is unlikely to be so optimistic. It turned out, however, that the management’s attempts to reach positive EBITDA indicators are again doomed to disappointment and will prove to be unprofitable for the company itself.
In order to raise margins, Aurora Cannabis is seeking to enter the luxury market, but in the face of declining retail costs, it is incredibly difficult to do this. However, even a 10 percent growth in the margin in the recreational cannabis market would dramatically increase sales if the management continues to meet the desired objectives. The margin in the recreational cannabis market is actually 38 percent, and that in medical is 67 percent. Both segments account for 50 percent of revenue at the same time.
Aurora Cannabis Inc. (ACB) concluded the Tuesday session falling -1.66% to $11.84.