IB Net Payout Yields Model

Aurora Cannabis: No Deal

After the close, Aurora Cannabis (ACB) announced a proposed offering of $250 million convertible senior notes due 2034. Such an offering is a likely sign that Coca-Cola (KO) isn't offering the company a ton of cash to invest in their international cannabis expansion.

My view has been negative on the fundamentals of the cannabis business and the wild wheeling and dealing of the management team. The company just purchased Whistler Medical Marijuana for $175 million in an all-share transaction.

As usual, the company is very lacking in providing financial details on acquired companies hoping the market falls into the hype of having additional production facilities and licenses. Whistler apparently has EBITDA margins in excess of 30%, though the EBITDA level is just as crucial and isn't provided.

The stock is in no-man's land in the $7 range after disclosing the convertible debt offering. The stock likely continues to rally, though, the fundamental picture continues to have a lot of holes.

The sentiment on StockTwits remains far too bullish. When Bullish sentiment hits nearly 95%, the stock is clearly riding a momentum wave that won't end well. For now, these traders will do anything to push the stock higher. 

Disclosure: No position. Please review the disclaimer page for more details.


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