Forget $3: Could Aurora (TSX:ACB) Stock Drop to $0?

CalyxCrusher · Dec 10, 2019

Forget $3: Could Aurora (TSX:ACB) Stock Drop to $0?

With a worrying recent announcement, there is a chance that Aurora stock might go down further to a point where you might want nothing to do with it.

ca.finance.yahoo.com

Cannabis investors, beware: bad times are possibly on their way for Aurora Cannabis (TSX:ACB)(NYSE:ACB). Since Cannabis 1.0, the pot industry has declined drastically across the board. Aurora Cannabis is one of the major players in the marijuana sector on the TSX, and it might have worse on its way.
Bad news
Trading for $3.48 per share at writing, ACB stock is down by 74.62% from the record highs the company achieved right before the Cannabis 1.0 announcement. Aurora is one of the pot companies with plenty of assets to its name. The fact that there is no profitability in the legal weed sector, ACB had to rely on issuing shares to raise capital for those acquisitions.
In the stock market, the more shares you issue, the more the shareholder wealth gets diluted. The company already has over one billion shares trading on the stock market. The past Monday saw ACB announce that its holders have sent them a notice to convert the unsecured convertible debenture debt into equity for them.
According to ACB, the 5% convertible debentures are worth $277 million. The conversion of the debentures into equity will take place for $3.2837 per share. Based on the amount and the price per share, ACB will have to issue an additional 69.13 million shares with a deadline for March 9, 2020.
The already diluted wealth has caused the share prices of ACB to plunge. Issuing more than 69 million more shares will not make things any better for the pot producer.
…it gets worse
The only ray of hope for Aurora and the overall cannabis industry is the sale of products legalized by Cannabis 2.0. If there is a strong demand for Cannabis 2.0 products, it can open up a new revenue generation stream for Aurora Cannabis. Hopefully, this revenue stream will not get bogged down by the illegal sector with the competition.
Enter the United States Food and Drugs Administration (FDA). The FDA has released a detailed report that concerns all the safety issues related to CBD products. The governing body in the U.S. claims that there is a lack of evidence to support that CBD products are safe for consumption.
The cannabis sector was rattled by the CannTrust scandal because the company was growing unregulated strands of weed without regard to regulation. Reports like the one issued by a significant governing body can become the final nail in the coffin for companies that are already struggling.
Foolish takeaway
I want to say that my verdict on ACB is like the flip of a coin at 50/50. There’s the fact that a strong demand for Cannabis 2.0 can potentially send ACB stocks skyrocketing. Between the March deadline to convert unsecured convertible debentures into equity for its holders and the impact of health concerns on demands, I think the situation is not favourable for ACB.
I would be wary of ACB stock, but in the off chance it takes off, the sky is the limit for Aurora stock in the long run.

chex1111 · Dec 10, 2019

CalyxCrusher said:
Forget $3: Could Aurora (TSX:ACB) Stock Drop to $0?

With a worrying recent announcement, there is a chance that Aurora stock might go down further to a point where you might want nothing to do with it.

ca.finance.yahoo.com

Cannabis investors, beware: bad times are possibly on their way for Aurora Cannabis (TSX:ACB)(NYSE:ACB). Since Cannabis 1.0, the pot industry has declined drastically across the board. Aurora Cannabis is one of the major players in the marijuana sector on the TSX, and it might have worse on its way.
Bad news
Trading for $3.48 per share at writing, ACB stock is down by 74.62% from the record highs the company achieved right before the Cannabis 1.0 announcement. Aurora is one of the pot companies with plenty of assets to its name. The fact that there is no profitability in the legal weed sector, ACB had to rely on issuing shares to raise capital for those acquisitions.
In the stock market, the more shares you issue, the more the shareholder wealth gets diluted. The company already has over one billion shares trading on the stock market. The past Monday saw ACB announce that its holders have sent them a notice to convert the unsecured convertible debenture debt into equity for them.
According to ACB, the 5% convertible debentures are worth $277 million. The conversion of the debentures into equity will take place for $3.2837 per share. Based on the amount and the price per share, ACB will have to issue an additional 69.13 million shares with a deadline for March 9, 2020.
The already diluted wealth has caused the share prices of ACB to plunge. Issuing more than 69 million more shares will not make things any better for the pot producer.
…it gets worse
The only ray of hope for Aurora and the overall cannabis industry is the sale of products legalized by Cannabis 2.0. If there is a strong demand for Cannabis 2.0 products, it can open up a new revenue generation stream for Aurora Cannabis. Hopefully, this revenue stream will not get bogged down by the illegal sector with the competition.
Enter the United States Food and Drugs Administration (FDA). The FDA has released a detailed report that concerns all the safety issues related to CBD products. The governing body in the U.S. claims that there is a lack of evidence to support that CBD products are safe for consumption.
The cannabis sector was rattled by the CannTrust scandal because the company was growing unregulated strands of weed without regard to regulation. Reports like the one issued by a significant governing body can become the final nail in the coffin for companies that are already struggling.
Foolish takeaway
I want to say that my verdict on ACB is like the flip of a coin at 50/50. There’s the fact that a strong demand for Cannabis 2.0 can potentially send ACB stocks skyrocketing. Between the March deadline to convert unsecured convertible debentures into equity for its holders and the impact of health concerns on demands, I think the situation is not favourable for ACB.
I would be wary of ACB stock, but in the off chance it takes off, the sky is the limit for Aurora stock in the long run.

chex1111 · Dec 10, 2019

This must be the Motley Fool. These folks are borderline retarded. Same Fools who have been urging everyone to buy in to Canopy Growth the entire time it crashed. "It's reached the bottom, its on a dip," cried the Fool.

Now, Aurora- the announcement- It might go down so much lower that you want nothing to do with it..... But........It might go so high that the sky is the limit and you will be rich beyond your wildest dreams.
Wow, what a revelation, Pot stocks are a high-beta stock. I guess the Fool can say "look, look it went down or up like I told you."

I also take notice that the Fool will never talk about the crooked valuations ex. not conforming to GAAP accounting principles. This is the sub-prime mortgage fiasco of agriculture. You cannot Claim an asset just because you have clones or weed growing. It is not an asset until it is sold. If you can't sell it it's a liability to pay for storage and disposal. And it is clearly a liability when you are growing ie "biological assets" because you incur the costs of growing, without getting paid.

gb123 · Dec 10, 2019

zero lol

CalyxCrusher · Dec 10, 2019

chex1111 said:
This must be the Motley Fool. These folks are borderline retarded. Same Fools who have been urging everyone to buy in to Canopy Growth the entire time it crashed. "It's reached the bottom, its on a dip," cried the Fool.

Now, Aurora- the announcement- It might go down so much lower that you want nothing to do with it..... But........It might go so high that the sky is the limit and you will be rich beyond your wildest dreams.
Wow, what a revelation, Pot stocks are a high-beta stock. I guess the Fool can say "look, look it went down or up like I told you."

I also take notice that the Fool will never talk about the crooked valuations ex. not conforming to GAAP accounting principles. This is the sub-prime mortgage fiasco of agriculture. You cannot Claim an asset just because you have clones or weed growing. It is not an asset until it is sold. If you can't sell it it's a liability to pay for storage and disposal. And it is clearly a liability when you are growing ie "biological assets" because you incur the costs of growing, without getting paid.

It's yahoo finance, it's right in the link lol

The Hippy · Dec 10, 2019

I'm thinking much of this country has the BOYCOTT attitude.
2.0 or whatever point something is NOT going to save this sinking ship. Decent people have spoken. They just can't hear it yet as the greed is muffling their ears.
Wonder what they will try once they all tank and look at us as the reason?

westcoast420 · Dec 11, 2019

When they get to the point where people will no longer buy their shares they'll have to start selling assets to cover running costs. Cannabis 2.0 is hyped up almost as much as flower and when that flops alot of companies will go bust. What regular user of cannabis is going to start buying drinks to get high? lol. Funniest shit I saw was organisham spending 15 million on a chocolate making machine...lmao how fucking stupid are these companies lol

The Hippy · Dec 11, 2019

westcoast420 said:
When they get to the point where people will no longer buy their shares they'll have to start selling assets to cover running costs. Cannabis 2.0 is hyped up almost as much as flower and when that flops alot of companies will go bust. What regular user of cannabis is going to start buying drinks to get high? lol. Funniest shit I saw was organisham spending 15 million on a chocolate making machine...lmao how fucking stupid are these companies lol

I'm actually going to profit from measuring how stupid they are as I'm inventing a machine to measure it. No microscope exists at this point that can scale anything that big.

Forget $3: Could Aurora (TSX:ACB) Stock Drop to $0?

CalyxCrusher

Well-Known Member