Aurora Cannabis (NYSE:ACB) reported its fiscal fourth-quarter earnings a month ago. Thanks to Aurora’s poor results and guidance, ACB stock has lost 32% of its value since then.
Now trading at less than $4.50 per share, ACB stock should soon bounce back as a result of these three catalysts.
Aurora Polaris Is Nearly Complete
The news that construction of Aurora Polaris — ACB’s production facility for higher-margin, value-added products such as edibles — is nearly complete ought to please the owners of Aurora Cannabis stock. The company indicated that edibles and vape products would be made at the site, which it said should be ready for occupancy at the end of this month.
I’ve said it before, and I’ll repeat it. Edibles and cannabis-infused drinks, not dried flower, will be the real money- makers for cannabis companies.
“I can say with certainty that my age group (mid-50s) are far more inclined to try THC/CBD drinks or edibles than they are vapes or dried flower,” I wrote in my column published on Sept. 6.
Although I believe that the vaping issues facing the cannabis sector at the moment will get resolved, I continue to think vaping won’t attract as many customers over the age of 30 as edibles and cannabis-infused drinks will.
It’s good to see that Aurora mentioned edibles in its update.
First Outdoor Harvests
The company announced that its property in the Canadian province of British Columbia and its facility in Quebec have begun growing their first batch of outdoor cannabis plants.
In British Columbia, ACB has 55,000 cannabis plants. Aurora can cultivate over 200 additional acres at the location. In Quebec, it’s got 6,000 cannabis plants in the ground at the moment. All of the cultivated plants will be sent to its flagship facility for extraction and further testing
In mid-July, I argued that the shift to outdoor cultivation could boost ACB stock.
Outdoor cultivation of cannabis is cheaper than growing it indoors, and I would argue the process produces better tasting cannabis. As a result, shifting cultivation outdoors is a win/win scenario for Aurora Cannabis stock.
As the company continues to improve its cannabis cultivation methods, Aurora’s going to be able to offer some of the finest dried flower in the country.
In Canada, where I live, the retail cost of recreational pot is twice the cost of the black market cost. This means that cannabis producers such as Aurora have to figure out how to lower their production costs and pass those savings onto their retail customers. If they don’t, they can expect Canadians to continue to buy cannabis from their existing black market suppliers.
Ideas such as outdoor cultivation will undoubtedly get it part of the way there, but the news that Aurora has launched RoomMate Pro, its latest at-home hydroponic grow box, is music to my ears.
The RoomMate Pro will give my uncle, who dabbled with growing cannabis plants in his backyard in his younger years, the ability to grow marijuana inside, in all seasons, without too much trouble.
And the fact that ACB is keeping up with the latest indoor growing technology means even those who live in smaller spaces can produce lower-cost cannabis.
It might not be a huge revenue generator for the company, but it does provide ACB’s consumers with an alternative until more retail cannabis shops open across the country.
The Bottom Line on ACB Stock
The volatility of marijuana stocks is not going to go away.
That said, I think Aurora continues to have a lot of irons in the fire that will boost Aurora Cannabis stock down the road. In the meantime, as was the case for much of the past month, a dip of its share price below $4.50 provides investors with a good entry point.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.