Aurora Cannabis Stock Registers Strong Q3
Already one of the biggest marijuana companies around, Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) brought in another very strong financial report, hitting great numbers across the board.
The company saw a 249.2% increase over the last year in registered patients, jumping to 45,776. Part of that massive growth came about via the acquisition of CanniMed, which remains one of the largest marijuana deals to date. (Source: “Aurora Cannabis Announces Q3 Fiscal 2018 Results,” Aurora Cannabis Inc, May 8, 2018.)
But even without the CanniMed boost, Aurora Cannabis stock still saw an increase of about 86.5% compared to the previous year. Revenue fared similarly well, climbing 211.1% from the same period a year ago and up 37.6% compared to the previous quarter.
Total cannabis sales also jumped to $10.8 million, up 149.4% compared to last year and 11% compared to Q2.
The resulting boost to Aurora Cannabis stock amounted to a five-percent increase in value over the past two weeks.
But the strong financial report is important for more than just its strong numbers; it has also solidified Aurora Cannabis Inc as a pot company that may be able to stave off calls of overvaluation.
Is Aurora Cannabis Stock Overvalued?
One of the most dangerous questions to pot stocks is, “Is this marijuana stock overvalued?”
Those few words have the ability to radically alter the trajectory of a pot stock that is otherwise looking to grow.
A great example would be the recent performance of Cronos Group Inc (NASDAQ:CRON). Despite CRON stock’s strong performance in its recent quarterly report, the sales numbers were simply not able to justify its rapidly growing market cap. Or at least, that’s how many investors saw it.
Chart courtesy of StockCharts.com
What resulted was a massive drop in CRON stock, despite most other major pot stocks remaining static or gaining in May so far.
That Aurora Cannabis stock was able to emerge from its recent quarterly report with a strong gain in value shows that the company is safe from the overvaluation backlash, at least for now.
Which isn’t to say that many still don’t see Aurora Cannabis stock as overvalued. But I am not among them. I believe that Aurora Cannabis stock is one of the strongest players in the marijuana game, period.
The company has already amassed a huge market cap while consistently looking to expand both its production capacity and international reach, two very strong moves that will pay big dividends moving forward.
Aurora Valuable Acquisitions
The company is a very aggressive player when it comes to acquisitions, as evidenced by its blockbuster deal to take over CanniMed. The company has now completed a $3.2-billion deal to acquire MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF). The move will catapult Aurora stock to the top-dog position in the marijuana market in terms of market cap.
It will also dramatically increase the company’s production capacity, which could play a huge role in both the company’s near-term and long-term prospects. After all, with Canadian marijuana legalization approaching, another massive acquisition like this could put Aurora in a unique position to be one of the top suppliers of marijuana during the Canadian green rush.
While the Canadian marijuana market alone is not enough to justify Aurora’s market cap, combine it with the potential of the international market and Aurora’s strong position, and you have a company that is looking to grow in 2018.
Aurora Cannabis stock passed an important test with its third-quarter results.
The ACBFF stock growth following the release of the financial report shows that the company has managed to evade any new calls of overvaluation. Compare that to the fortunes of Cronos, as well as the company’s aggressive expansion strategy, and you have a lot of reasons to be optimistic about Aurora Cannabis stock.