Aurora Cannabis: What Happened? – The Deep Dive

Terry Booth’s Thursday departure from the C suite at Aurora Cannabis (TSX: ACB) (NYSE: ACB) took the form of a controlled implosion at the center of the cannabis business. It doubled as a layoff announcement that, in contrast to Sundial, HEXO and Tilray’s layoff announcements, which framed the components as normal-course-of-business necessary evils, Aurora took…

Aurora Cannabis: What Happened? – The Deep Dive

Terry Booth’s Thursday departure from the C suite at Aurora Cannabis (TSX: ACB) (NYSE: ACB) took the form of a controlled implosion at the center of the cannabis business. It doubled as a layoff announcement that, in contrast to Sundial, HEXO and Tilray’s layoff announcements, which framed the components as normal-course-of-business necessary evils, Aurora took the opportunity to acknowledge what the market had been telling them for the better part of the trailing 12 months: this isn’t going to work as a functional business.

By announcing that they would be unwinding leverage and cutting SG&A costs while they dial back the build-out, Aurora was able to create the appearance of a company who believes in the value of what was left over when the smoke cleared and, arguably, got the market believing right along with it.

In the context of a CEO resignation, write down of 24% of the goodwill line, and guidance for a 30% revenue cut, with no guidance for margin and a promise to cut SG&A, all happening at the same time, a 15% fall in the stock price almost seems like a win. Newly appointed Interim CEO Michael Singer looks hyper-competent coming out of the gate by getting it all out of the way in a single news announcement, then immediately burying that announcement with another announcement about new independent directors. Take the medicine, move the story along.

Aurora’s stock price and their bottom line alike lived and died by a portfolio of cannabis assets that Aurora traded in.But no amount of austerity or re-s
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