Last month, Aurora Cannabis (NASDAQ: ACB) shares rose. The cannabis company didn't report earnings or make a big deal. Aurora took advantage of the German government's "landmark legalization achievement," marijuana legislation that will make medical marijuana easier to purchase.
Aurora's stock may build on these gains and start a greater rise. Could German market reform improve Aurora's sales? Aurora operates in 15 cannabis markets worldwide, with Germany being its largest and most attractive. Aurora claims national leadership and is "well-positioned to benefit from de-scheduling and potential recreational markets."
The company expects this German legislation to expand the medicinal marijuana market, but it doesn't break out income by country. Aurora, which has focused on worldwide growth and the medical industry in recent years, may profit most from German developments.
Aurora's finances are improving. Aurora has improved its income and bottom line. Net sales for the last three months of 2023 was 64.4 million Canadian dollars, up 5% from the previous year, according to the company's February results report. CA$4.3 million in adjusted EBITDA was a record. Its net loss was CA$25.2 million, down from CA$62.4 million a year earlier.
Aurora may be more sustainable today after becoming leaner, cutting costs, and focusing on higher-margin medical marijuana. The company also forecasts positive free cash flow this year, which would be another fantastic achievement.
Buy Aurora Cannabis stock? Aurora's revenue may increase if Germany's medical marijuana market loosens, but how much is unclear. Investors risk overstating Aurora's impact from these recent occurrences. The German marijuana market is remains restricted despite government change.
Without meaningful revenue growth from these recent events, Aurora and other cannabis companies may soar due to favorable marijuana news, only to give back part of those gains later. A larger German market may boost Aurora's sales, but not as much as it did recently.
Aurora is still dangerous despite its improved financial situation. Profitability and growth aren't its strengths, although revenue rose 5% in its most recent quarter. This gain will likely be short-lived unless the company's next quarterly reports feature a positive prognosis for the new German regulations.
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