Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB) is once again making headlines for all the wrong reasons…
The day after the Canadian Licensed Producer (LP) announced that it would delay the release of fourth quarter financial results, it reported that it would shut down the Aurora Polaris facility in Alberta.
Although the company said the Aurora Sky facility will remain open, we are not sure how much faith to put behind those words. The new management team has not impressed us nor the market and the stock continue to get punished.
With that being said, the decision to construct extremely large and expensive state-of-the-art automated cultivation facilities in Canada was not made by the current management team and hope the new team has a strategy behind this decision.
Going forward, Aurora Cannabis plans to shift the production of medical cannabis to Aurora Sky (Polaris used to do this) and manufacturing to Aurora River (located in Ontario). Due to the size of Aurora Sky, we would not be surprised if the company shut down Aurora Rive and will monitor how the story continues to evolve.
We are curious on how broker-dealers and the market will respond to the new development and remain cautiously optimistic with Aurora Cannabis. We believe the decision to delay the release of quarterly earnings is related to the facility closure as the management team will most likely have to update guidance ahead of the release.
A few years ago, Aurora Cannabis spent approx. C$7 billion to acquire two Canadian LPs and we believe the market continues to punish the company for this decision. As the company continues to shut down facilities, it shows how these transactions did not live up to expectations.
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