What is Behind this Stock’s Jump in Valuation?

We examine how this company’s stock price matches up to its recent earnings report and other company news.

Watching cannabis company stock prices this week was enough to give weed investors whiplash. Tilray Inc. made and lost huge valuations. Smaller companies saw gains even more significant by comparison.

Aurora Cannabis Inc. (NASDAQ OTC: ACBFF) (TSX: ACB) ascended on its good news. In spite of an earnings miss, the stock increased to $12.77 in September. However, revenues for the company were only $19 Million. That figure was below analyst estimates.

So does that mean the valuation increase was riding the weed wave up? Let’s have a look.
The company’s stock price got an increase from rumors that Coca-Cola Co. had its eye on Aurora. The denial of any firm agreement could mean the rumor mill was working too hard, or it could mean they are still shopping for the right partner.

Aurora’s price point increased, and looks like it will continue to do so. The company has moved toward producing oils. Oils sell at a higher price than other cannabis products. Their price point for dried marijuana increased as well. These are good signs for the company’s pricing trends.

The company’s expenses were up this quarter, a lot. That indicates the company is getting more expensive to run. It also signals that Aurora is getting ready for legal recreational cannabis in Canada.

Overall, holders of Aurora’s shares are in a good position. A lot of good news is represented in the stock price, but there are still a lot of factors that could justify a higher valuation. The company will have to work to increase market share and market its products well for that to happen. And the right marriage partner wouldn’t hurt.

Written by Veronica Viveiros

Veronica has been working with freelance writing clients for over seven years. She has provides writing, coaching and editing services to Capital Market clients. Her educational background in Finance and Journalism has given her a broad base from which to approach The Blunt Investor.

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