ACB CN

Aurora Cannabis Inc

Healthcare, Consumer


Presented:09/18/2018
Price:CA$11.02
Cap:$8.38B
Current Price:CA$7.59
Cap:$0.33B

Presented

Date09/18/2018
PriceCA$11.02
Market Cap$8.38B
Ent Value$3.53B
P/E RatioN/A
Book ValueCA$2.39
Div Yield0%
Shares O/S951.85M
Ave Daily Vol17,277,789
Short IntN/A

Current

PriceCA$7.59
Market Cap$0.33B
Aurora Cannabis, Inc. engages in the provision of medical cannabis. Its activities include cultivating, harvesting, and selling of Canadian medical marijuana. It also involved in patient counselling and outreach services. The company was founded by Terry Booth and Steve Dobler on December 21, 2006 and is headquartered in Vancouver, Canada.

Publicly traded companies mentioned herein: Aurora Cannabis Inc (ACB CN; ACBFF), Canopy Growth Corp (CGC; WEED CN), The Coca-Cola Co (KO), Constellation Brands Inc (STZ)

Highlights

The presenter is short shares of Aurora Cannabis (ACB) due to a belief that cannabis supply in Canada will drastically outstrip market demand, ultimately causing dramatic price declines. Additionally, the Canadian government has already delayed the legalization of recreational marijuana until October 17th, which slows the conversion of the illegal market to legal purchases. Longer-term, the presenter assumes ACB will sell 120k - 140k kilograms of marijuana per year at C$2.25/gram. The company could see total revenue of C$360MM (~C$310MM from domestic sales, and he gives credit for ~C$50MM of international revenue). This is 20% below Street estimates in 2019 and would lead to a 50% miss in 2020. On an EV-to-Sales basis Aurora is trading at 23x forward sales. The stock appears to be extremely overvalued at this time, as a fairer multiple would be, in his opinion, low single-digits. This suggests downside risk in excess of 60% - 70%.

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Idea Discussion

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