Please ensure Javascript is enabled for purposes of website accessibility

Why Aurora Cannabis Stock Plunged 18% in April

By Joe Tenebruso – May 3, 2020 at 4:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The beleaguered marijuana stock is burning through cash at an alarming rate.

What happened

Shares of Aurora Cannabis (ACB -12.78%) lost nearly 20% of their value in April, even as the S&P 500 gained more than 12%. A host of maladies have combined to crush the popular marijuana stock.

So what 

Ontario, Canada's most populous province, forced marijuana dispensaries to close on April 4 as part of its efforts to stem the spread of COVID-19, the disease caused by the novel coronavirus. Although the pot shops were allowed to reopen a few days later, only phone and online orders were permitted. The situation worsened what had already been a shortage of cannabis retail outlets in Canada, which has resulted in supply overages for major marijuana producers like Aurora.

The lack of retail outlets is particularly damaging to Aurora, which has seen its cash reserves dwindle following hefty operating losses. Investors are rightfully concerned that the cannabis giant could run out of cash.

A pile of cash burning in flames

Aurora Cannabis is rapidly burning through cash. Image source: Getty Images.

Now what

With its shares down another 5% already in May, Aurora's stock price is now down a brutal 67% so far in 2020 -- and more than 90% over the past year. Yet more pain might lie ahead.

Aurora has been forced to cut costs by ceasing the construction of some of its most promising production facilities, selling off other cannabis production assets, and laying off hundreds of workers. Yet despite these actions, Aurora's path to profitability remains uncertain.

The beleaguered cannabis company is once again turning to share issuances to raise cash, which will probably further dilute shareholders. Worse still, insiders appear to be bailing out of the stock.

For all of these reasons -- and with more losses likely on the horizon -- Aurora Cannabis' investors might want to consider selling their shares.


Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Aurora Cannabis Stock Quote
Aurora Cannabis
$1.16 (-12.78%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.