Shares of Canadian pot titan Aurora Cannabis (NYSE:ACB) not only failed to break out of their nearly yearlong funk last month, but they also fell by another 12.5% over the course of January, according to data from S&P Global Market Intelligence.
Why is Aurora's stock failing to find a bottom? While some top pot stocks like Canopy Growth and OrganiGram Holdings actually posted gains last month, Aurora's shares continued to move lower over growing concerns that the company will face a cash crunch in the not-so-distant future.
Aurora's dwindling cash position and highly uncertain growth outlook haven't gone unnoticed on Wall Street. On Jan. 10, for instance, Piper Sandler slashed its 12-month price target on the stock from $3 to $1. In effect, the investment bank is calling for the company's shares to shed another 50% of their value by the end of 2020.
That's a rather dire take -- especially in light of the fact that the stock has already fallen by 61% over the prior 12 months. Nonetheless, GLJ Research is even more pessimistic about Aurora. Last December, GLJ analyst Gordon Johnson rolled out a controversial $0 price target on the pot stock. In his view, Aurora is flat-out worthless.
Is Wall Street wrong about this top pot stock? Aurora definitely has some serious issues to contend with this year. The company has to clean up its balance sheet, find sources of capital other than simply selling shares, and capitalize on the recent legalization of high-margin derivatives like edibles, vapes, and beverages. Unfortunately, Aurora may not be able to achieve any of these key operational goals anytime soon. Investors, in turn, would probably be wise to avoid this name in 2020.