Here’s why Aurora Cannabis lost 9% on Friday morning

Aurora Cannabis (TSE: ACB) tanked 9% in the stock market on Friday morning as the company reported another big loss for its fiscal third quarter. The company also announced share-sale plans, cost-cutting, and executive changes late on Thursday.

Aurora Cannabis’ Q3 financial results

Aurora reported C$164.7 million of net loss (£96.50 million) in the third quarter versus the year-ago figure of C$97.5 million (£57.13 million). The cannabis company valued its revenue at C$58.4 million (£34.22 million) in Q3 – an increase from C$53.6 million (£31.40 million) in the same quarter last year.

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In comparison, analysts had called for C$56.8 million (£33.28 million) of revenue in the recent quarter and C$36.1 million (£21.15 million) of GAAP loss.  

Aurora announces share sale and cost cuts

In recent years, Aurora resorted to share sales and cost cuts to combat disappointing financial performance – a move that it re-enacted on Thursday after reporting its third-quarter results.

Aurora had previously announced plans of slashing its annual costs by C$300 million (£175.77 million). Now, the Canadian company wants to cut costs by another C$60 million (£35.15 million) to C$80 million (£46.87 million) on top of that.

The Edmonton-based company also highlighted that it intends to launch a C$300 million (£175.77 million) share-sale and that it will switch its listing from the NYSE to the Nasdaq Stock Exchange to benefit from the latter’s cost-effectiveness.

Aurora named its lead independent director, Ronald Funk, as its next chairman as Michael Singer exits the role and returns to just a seat on the board. It also hired two new executives for human resources and supply chain.

CEO Miguel Martin’s remarks

Commenting on the earnings report on Thursday, CEO Miguel Martin said:

“Consistent with many of our peers, the quarter presented challenges in the Canadian adult-use segment. This reinforces the importance of Aurora’s broadly diversified business model that balances domestic medical, international medical, and adult-use platforms.”

Analyst John Zamparo of IBC recently downgraded Aurora from ‘Neutral’ to ‘Underperformer’ and slashed his price target on the stock to C$9.0 (£5.27) from C$15 (£8.79).

Aurora Cannabis opened at C$8.11 per share (£4.75 per share) on Friday and is currently exchanging hands at C$8.32 per share (£4.87 per share). In comparison, the mid-cap stock had started the year at C$12.11 per share (£7.10 per share). At the time of writing, Aurora Cannabis has a market cap of C$1.18 billion (£690 million).