Aurora Cannabis Stock Is Down, but Hopes for a Consumer Company Partnership Remain – Barron’s

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Aurora Cannabis Stock Is Down, but Hopes for a Consumer Company Partnership Remain – Barron’s


Photograph by Jose Luis Sanchez Pereyra

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Aurora Cannabis

stock (ticker: ACB) dropped about 1% Wednesday after the company said it plans to sell $750 million in new securities.

The back story. Shares of the Canadian cannabis company have surged more than 80% so far this year and more than 40% over the last 12 months.

Aurora stock got an immediate boost in March after it said veteran activist investor Nelson Peltz had joined the company as a “strategic adviser.”

The company hasn’t been able to match the heady valuations of fellow Canadian cannabis growers
Tilray

(TLRY) and
Canopy Growth

(ticker: CGC). Its relationship with Peltz shows that management is eager to close the gap.

What’s new. Aurora filed a prospectus Tuesday night to sell $750 million in debt, equity, and other securities over the next 25 months. The stock fell on Wednesday as current investors took into account the potential for dilution.

“We have introduced this option as a prudent and long-term strategic measure to provide us with flexibility in access to growth capital, if or when required, to continue executing on our global expansion and partnering strategy,” Executive Chairman Michael Singer said in a statement late Tuesday.

Looking ahead. Singer’s reference to a “partnering strategy” is likely to increase expectations among investors that Aurora will announce a partnership with a large consumer-packaged-goods company.

The company’s new relationship with Peltz, who has a long history of work in the consumer-packaged-goods space, has already stirred speculation that Aurora will form a partnership with a major consumer company, most likely for a cannabidiol, or CBD, offering.

Write to Ben Walsh at [email protected]

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