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Aurora Cannabis Q4'18 - Live Updates

Aurora Cannabis (ACB) reported results after the close providing the first official view of Canadian cannabis companies following the legalization of adult-use cannabis on October 17. Updates from the earnings report, earnings call and after-market reactions will be continuously updated here.
On January 8, Aurora Cannabis provided preliminary guidance of the following:
  • Revenues - C$50 to $55 million
  • EBITDA - positive by second calendar quarter 2019
The company reported the following key FQ2 numbers:
  • Q2 Loss of $237.75M.
  • Revenue of $47.58M (+387.0% Y/Y)
  • Kilograms produced 7,822, kilograms sold 6,999
Lots of information to cover here including the large drop in average net selling prices. Dried cannabis was down 26% sequentially to $6.23 per gram.

Aurora is now operating at an annualized production rate of approximately 120,000 kgs, based on Health Canada approved planted rooms, and expects to reach in excess of 150,000 kgs by March 31, 2019.  Management reiterates previous guidance that based on the Company's current confirmed production results, Aurora will have approximately 25,000 kgs available for sale in Q4 (April to June 2019).

Aurora Cannabis has the potential to triple kilograms sold by FQ4, but one has to expect prices to dip. A similar 20% dip to selling prices would cause C$47 million in net cannabis revenues to reach about C$113 million. The question is whether prices can hold at $5/gram on dried cannabis and about $8/gram on cannabis extracts.

Update 6:55pm est
The management team appears far too bullish on cannabis prices going forward despite a huge ramp in global supply. The shift to extracts will eventually help prices, but the company admitted that the market doesn't lack supply.

The illegal market hasn't gone anywhere and the new supply from Aurora Cannabis might be higher quality, but it doesn't mean that consumers are going to pay up for the premium supply.

The stock is traded down as the conference call ends so the market wasn't impressed with the lack of actual financial results in the earnings release for a company that wants to be considered a legitimate business.

Update 2/12 - 11:30am est
The stock is bouncing around going from a small loss pre-market to a small gain now. Management failed to provide the financial details to get the market excited about the next step at Aurora Cannabis. The stock needs to get back above $8 for a trade.

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