Aurora Cannabis (TSX:ACB) finally announced some tangible news about the potential listing of its common shares on a major United States exchange, as the company said on Tuesday that it made an application to list on the New York Stock Exchange (NYSE) under the same ticker the stock trades on the TSX, and trading is anticipated to commence before the end of this month after regulatory approvals.
It’s been a long time since the company made public its intent to dual list its common shares and avail itself to U.S. investors whose brokers and trading platforms may not have had the opportunity to buy the Canada listed stock hustle free.
Could the stock soar upon a U.S. listing?
The dual listing of Aurora equity units on two major North American exchanges will undoubtedly increase market depth on the stock and enhance price discovery — two important factors that may dampen volatility while lowering the potential implicit trading costs associated with a ticker.
Implicit trading costs include execution delay costs and slippage costs, which, arguably, constitute a higher trading cost component than mere explicit costs like trading fees and commissions.
Most noteworthy, as trading in the company’s shares begins in the United States, investors who were holding back from trading in a foreign listed stock due to foreign currency risk will see this risk suddenly become a thing of the past as they place their trades in local currency.
It is likely that Aurora stock price could sustain its price recovery which, ironically, started after the record $5 billion investment by Constellation Brands into Canopy Growth back in August this year.
That said, since this is not the first time that news about the company’s potential listing on a U.S. exchange has been released to the market, investors may have already priced in the potential benefits from a NYSE listing in the current share price.
It’s not like U.S. retail investors couldn’t trade in the company’s shares anyway, as the ticker OTCQB:ACBFF was active south of the boarder.
Further, considering that it took just over a week for Canopy shares to start trading on the same American exchange from the date of announcement, it is likely that Aurora shares may debut trading on the NYSE right when a general “sell-the-news” episode begins after recreational marijuana sales kick off on October 17 and the hype on marijuana stocks fade.
Investor takeaway
Listing common shares on the NYSE is a welcome development for Aurora stock, as the move will undoubtedly improve trading efficiency and enhance price discovery on the ticker.
That said, Aurora has always been one of the most trending tickers and usually among the most traded stocks on the TSX since early 2017. There could be considerable depth to the ticker and I doubt that the shares could get the same magnitude of a price rally as what happened with Cronos Group, nor could there be violent price movements as with recently listed Tilray, but investors could probably enjoy some capital gains on the day shares debut trading on the NYSE.
