Aurora Cannabis (NYSE: ACB; TSX: ACB) is the second largest cannabis company in the world in market capitalisation. The year is coming to an end and it has been a disaster lately!
Company Background
Based in Canada, Aurora Cannabis, Inc., is a producer and marketer of cannabis. Although it has its headquarters in Edmonton, the company’s production and sales operations span over 20 countries with a combined production capacity of over 600,000 kilograms of cannabis per annum.
Aurora’s shares are listed on the Toronto Stock Exchange (TSX) and are traded under the ticker symbol “ACB.” In October 2018, the company also commenced trading on the New York Stock Exchange (NYSE) under the same ticker symbol.
After Canopy Growth, Aurora Cannabis is the second largest cannabis company in the world in market capitalisation.
Industry Overview
According to Grand View Research, the global legal cannabis market is projected to hit at least $60 billion in 2025 at a compound annual growth rate (CAGR) of 23.9%. The major drivers of this growth are the increasing adoption and legalisation of the erstwhile controlled substance as a pharmaceutical product.
The possibility of increased government earnings through taxation is another catalyst. However, the European market, if the stringent regulatory atmosphere persists, is expected to contribute very little to the growth. South Africa and New Zealand are set to legalise cannabis, a move that will open two substantially significant markets for the product.
Growth and Expansion
Largely, Aurora’s growth can be attributed to its acquisitions. Through them, it has been able to expand its operations beyond Canada to Denmark, Germany, and Latin America. In fact, its subsidiaries now include Germany’s largest distributor of cannabis to pharmacies, Pedanios GmbH.
Moreover, there are CanvaxRX, a company focused on patient medical outreach services, and H2 Biopharma, a late-stage ACMPR applicant in Quebec, which Aurora acquired respectively in 2016 and 2017. And in 2018, the company completed the total take-over of CanniMed Therapeutics, one of its old competitors.
Subsequently, that was followed by the acquisition of MedReleaf. Then, reports emerged in September 2018 that Aurora was in talks with Coca-Cola over the possibility of cannabis-infused beverages for medial purposes.
Financials
For the fourth quarter of 2018, Aurora reported over 223% growth in revenue over the comparable quarter of 2017. And for 2019, it has continued on this path of solid revenue growth. For the recent third-quarter earnings results, Aurora averaged 20% growth in revenue across all key markets.
This was driven by boosted production capacities and sustained sales across the domestic and international medical cannabis markets. The domestic consumer and medical cannabis sales were up by 37% and 8% respectively while international medical sales grew by 40%.
Perhaps, the best news is that with Aurora’s dedication to cut down on costs, SG&A
expenses are also expected to stabilise for the coming financial years.
ACB stock price has been tumbling this summer. We are expecting to see it pick up in December and January.
Conclusion
The cannabis industry is set to be huge. In fact, most analysts believe that by 2030, it would have hit the $75 billion mark. Specifically, Aurora Cannabis, with its peak production capacity, is well-positioned to tremendously benefit from the growth.
Therefore, if you are looking for a top marijuana stock to buy, Aurora should be it.
