Aurora Hashish now has a goal value of $ 1: Analyst

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Analysts pointed to weak European sales and cash risks as key factors

Author of the article:

Emma Spears

Release date:

January 10, 2020 • • January 10, 2020 • • Read for 2 minutes A worker tends to marijuana plants at the Aurora Sky facility in Edmonton, Alberta, Canada on Tuesday March 6, 2018. A worker tends to marijuana plants at the Aurora Sky facility in Edmonton, Alberta, Canada on Tuesday March 6, 2018. Photo by Jason Franson / Bloomberg

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“German sales were the most expensive and highest-margin product, so the suspension of sales is damaging the sales and margin mix.”

The company faced further problems after the eagerly anticipated sale of medical cannabis in Germany was suspended until a review by German health authorities was carried out “until further notice”.

“Aurora built its large capacity in Canada with the expectation of exporting a significant amount internationally, but those sales have been very slow,” Lavery wrote in the note. “German sales were the most expensive and high-margin product, so suspending sales hurts the mix of sales and margins,” he added.

Lavery noted that he doesn't expect Aurora to see positive cash flow from its production by the end of 2021.  / Photo: monsitj / iStock / Getty Images Plus Lavery noted that he doesn’t expect Aurora to see positive cash flow from its production by the end of 2021. / Photo: monsitj / iStock / Getty Images Plus Photo by monsitj / iStock / Getty Images Plus

Lavery noted that he doesn’t expect Aurora to see positive cash flow from its production by the end of 2021. Meanwhile, a $ 200 million cash deficit is projected, which will likely force the cannabis giant to refinance its whopping $ 360 million debt due for repayment in August 2021.

That would leave the company with just $ 30 million in cash and $ 800 million in debt in the second quarter of fiscal 2022.

Investor short-term hopes are now leaning on the second wave LP’s cannabis offerings, despite the fact that the launch of liquid vape products has been suspended indefinitely.

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