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What happened
After jumping 32% earlier in the session, shares of the Canadian pot company Cannabis Aurora (NYSE: ACB) remain up 21% as of 10:50 a.m. EST. The stock has been on a bumpy road this year. Although stocks have fallen 65% since the start of the year, they have jumped about 80% just since the US election on November 3.
So what
And the election still shifts stocks today. News that the Trump administration has officially paved the way for a transition to Biden’s presidency gives investors in marijuana companies more optimism for the industry.
Image source: Getty Images.
Investors in pot stocks applauded the election for several reasons. Five states – New Jersey, Arizona, Mississippi, Montana, and South Dakota – had voting initiatives related to legalizing marijuana, and all five were passed.
Aurora’s shares more than doubled in election week alone. Part of the rise was also the belief that a Biden administration would be more supportive of the federal legalization of weed. However, this is not something investors can count on.
Now what
Aurora has spent much of this year restructuring its business and raising capital as its losses increase. The changes included cutting jobs, shutting down operations to consolidate production, and selling additional inventory to raise funds.
In its recently released first quarter of fiscal 2021, Aurora said it achieved around $ 52 million in revenue. This was a decline from the period a year earlier, which is not something investors in a growing industry want to see.
The good news for investors is that the company aims to achieve positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the next quarter. This is where investors should be focusing in the short term.
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