Aurora Cannabis: Not All Reverse Splits Are Negative
Aurora Cannabis announced plans for a 1:12 reverse stock split.
Most research supports dire outcomes for most reverse stock splits.
Not all splits are negative, though, providing potential upside on the stock after already falling on the news.
Aurora Cannabis only trades at ~3x sales estimates now.
With Aurora Cannabis (NYSE:ACB) trading below $1, the market shouldn't be too surprised the company announced a reverse split of their stock. Historically, reverse splits are negatives for participating stocks, but the cannabis sector is a new space where the capital structure and regulatory restrictions are as much the issue for the company than any dire situation. My investment thesis still remains positive on the catalysts for Aurora Cannabis during 2020, while the stock will be volatile during this process.
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