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Why Aurora Cannabis Stock Got So High This Week

By Eric Volkman – Oct 1, 2021 at 5:11PM

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It was all about the company's most recent quarterly results, particularly in the medical marijuana cateogry.

What happened

In what's hardly a regular occurrence for a marijuana stock these days, Aurora Cannabis (ACB 0.89%) was a real market beater, rising 19% over the course of this week. Somewhat better-than-expected quarterly results, combined with gains in an important product category, helped push Aurora's shares higher.

So what

Monday night, Aurora released its fourth-quarter 2021 figures, and they sure featured a lot of red ink. Net sales declined by 20% year over year (and marginally compared to the third quarter) to just under 55 million Canadian dollars ($43 million). The adjusted loss narrowed significantly from the year-ago result of CA$33 million, but was still crimson-toned at over CA$19 million.

Gloved hand holding marijuana leaf in front of Canadian flag.

Image source: Getty Images.

Worse was anticipated in terms of profitability, however, even if that sales figure didn't quite meet expectations. 

Another factor investors might have liked is that Aurora seems to be successfully pivoting to focus more on sales of medical marijuana, a more profitable category than recreational, for the most part. Sales of medical cannabis rose 9% year over year to over CA$35 million for the quarter, in contrast to the queasy 45% decline in recreational.

As if to prove its recent commitment to the medical product, Aurora announced later in the week that it has launched a medical cannabis-oil product called Bidiol in Uruguay (one of the few countries in the world that has fully legalized marijuana and its derivatives). It's available in pharmacies throughout the South American nation, the company said.

Now what

Investors are expecting steeper-than-estimated losses from marijuana companies, especially if they're based in the struggling cannabis market that is Canada. I'm not sure this week's surge of optimism on Aurora is justified; after all, many other weedies are enjoying notable revenue gains, not declines. Also, the Canadian company's steep fall in recreational sales and its continued lack of profitability are very concerning.

Eric Volkman 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.

Stocks Mentioned

Aurora Cannabis Stock Quote
Aurora Cannabis
ACB
$1.13 (0.89%) $0.01

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