Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 SPY total return over the last 12 months is 52.1%. But there is no question some big-name stocks performed better than others along the way.
Aurora’s Difficult Road: One company that has been a huge disappointment in the last year has been Canadian cannabis producer Aurora Inc TLRY.
Aurora battled a difficult Canadian cannabis market throughout 2020. Aurora’s biggest problem continues to be access to capital. The company continues to dilute its shareholders with at-the-market offerings as it burns through cash.
Aurora spent most of 2020 restructuring its business, and cutting costs, including issuing hundreds of layoffs and closing facilities. Aurora also replaced former CEO Terry Booth, who had been with the company since 2013.
Fortunately for Aurora investors, the company was still able to generate 13.5% revenue growth in 2020 even amid the COVID-19 pandemic. In the most recent quarter, Aurora reported 11% growth in cannabis net revenue, including 562% sales growth in international medical markets. At the same time, SG&A costs, including research and development, were down more than 50% from a year ago.
See also: How to Buy Aurora (ACB) Stock
At the beginning of 2020, Aurora shares were trading at around $2.25. By the beginning of March, the stock was down to $1.39 after news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Aurora bottomed at 60 cents during the pandemic-driven March sell-off.
By May, Aurora completed a 1-for12 reverse stock split to maintain its listing on the NYSE. Aurora shares initially spiked as high as $19.68 following the reverse split, but the rally stalled at that point until the November U.S. presidential election.
A victory by Democrat Joe Biden in November and a surprise blue wave giving Democrats control of both the Senate and House sent cannabis stocks soaring on optimism that U.S. cannabis legalization may be just around the corner.
Aurora In 2021, Beyond: The stock ultimately peaked at $18.98 in February 2021 during a retail investor-fueled short squeeze before pulling back to around $8. Traders may be expecting more losses and financial problems for Aurora in 2021. Or they may simply see lack of progress on U.S. legalization and more lackluster growth numbers from the Canadian market as a reason to be skeptical of the stock in the near-term.
Aurora investors who bought one year ago and held on have missed out on the broad market rally and huge runs in other cannabis stocks. In fact, $1,000 in Aurora stock bought on April 14, 2020, would be worth about $882 today.
Looking ahead, analysts are expecting significant rebound for Aurora in the next 12 months. The average price target among the 12 analysts covering the stock is $9.68, suggesting 20.7% upside from current levels.
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