Investors who thought they bought the dip in Aurora Cannabis (TSX:ACB) lost more money when the company posted another nasty quarterly earnings report. ACB stock lost one-fifth of its value last week after posting results on Sep. 22. The horrendous results are a reminder to avoid this stock.
Aurora touted its high-quality production, low-cost (automated), and mass-scale. If the firm was growing, it would not have to close several production sites. The company posted losses of $1.9 billion in Q4 alone. For fiscal 2020, it lost an incredible $3.3 billion.
For Q1, Aurora forecasts revenue well-below previous guidance at $60 - $64 million, compared to $67.5 million previously. Despite gross margin (adjusted) at 50%, losses keep mounting.
Alternative Investments
Investors who want exposure to the cannabis market may consider Aphiria (TSX:APHA), which is in the drug manufacturing category. MSOs also have better potential. But since they trade in the over-the-counter (OTC) market, they are valued at a discount. Investors may consider Green Thumb Industries Inc. (CSE:GTBIF) or Cresco Labs Inc. (CSE:CRLBF)
Your Takeaway
Aurora is a bankruptcy risk. Its market is too competitive and fractured, raising costs and lowering any chance of future profits. Avoid this stock as an investment and only trade the stock for a short-term gain.
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