Why Aurora Cannanis Inc (TSX:ACB) Stock Rose 14% This Past Week

A flurry of mostly good news may have driven Aurora Cannabis Inc’s (TSX:ACB)(NYSE:ACB) sharp rise this week.

| More on:
edit Cannabis leaves of a plant on a dark background

Image source: Getty Images

This past week, Aurora Cannabis (TSX:ACB)(NYSE:ACB) shares went on a minor rally, starting off Monday at $10.54 and reaching $12.02 by the middle of Friday. Although the week was a good one for the TSX in general, Aurora rose more than other stocks in the same period. Aurora particularly trounced Canopy Growth, rising 14%, while the later actually fell about 0.84%.

These past seven days have been great for Aurora and its investors. The question is, why? It’s been many weeks since Aurora published its last quarterly report, which means investors have had no new financial data from the company to chew on. However, there have been many positive news stories in the past week that may have driven bullish sentiment toward Aurora. We can start with one of the most prominent.

A billionaire advisor

One of the biggest stories from Aurora this past week was the company’s appointment of U.S. billionaire Nelson Peltz as strategic advisor. Peltz is the founder of Trian Fund Management LP, a firm that generally takes an active role in guiding and advising the companies it invests in. As part of his appointment, Peltz was given the option to purchase up to 20 million Aurora shares at $10.37 per share. Aurora shares spiked on the news, which was the most likely reason for this week’s gains.

Retail plans revealed

Another major story out of Aurora was the announcement that the company has been investing in its retail strategy.

Currently, Canopy is the leader of the cannabis retail pack, with its own Tweed-branded stores that opened the day legalization hit. Other cannabis vendors are more reliant on third-party stores, so beefing up their own retail presence will be key to competing with Canopy.

Aurora has finally revealed its approach to this challenge. By investing $28 million in Choom Holdings, the company has rapidly acquired a stake in one of Canada’s largest retail cannabis networks. This may benefit the company by helping it move more cannabis faster, in a market plagued by supply shortages and sold-out stores.

A rising international footprint

A final big story out of Aurora this past week was that the company grew its international footprint with its first commercial export to the U.K. Canadian cannabis growers have long had relationships in countries like Germany, Jamaica, and New Zealand. So far, however, markets like the U.S. and the U.K. have proven harder to crack. By making its first commercial shipment to the U.K., Aurora has proven that it is making headway in markets that were previously inaccessible to Canada’s cannabis players, which bodes well for its future growth prospects.

Foolish takeaway on Aurora Cannabis

Aurora Cannabis has long been the number two Canadian cannabis producer, having actually eclipsed Canopy by revenue two quarters back. Its most recent quarter was a bit of a disappointment in net income terms, but revenue growth continued at a dizzying pace. This week we’ve seen solid evidence that Aurora is still investing massively in future growth. Should these investments pay off, there’s no telling what the future could hold for this company.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Are Cannabis Stocks Still a Thing in 2023?

The whole question of whether cannabis stocks are still relevant in 2023 is an interesting one. Here's my take on…

Read more »

A cannabis plant grows.
Cannabis Stocks

Why Canopy Growth Stock Fell 72% Last Year

Canopy Growth stock is a beaten-up cannabis giant that is trading at a discount compared to historical multiples. But is…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is SNDL Stock a Buy in January 2023?

SNDL is among the worst-performing cannabis stocks in the last three years. But is SNDL stock a buy right now?

Read more »

a person watches a downward arrow crash through the floor
Cannabis Stocks

Why Tilray Stock Fell Almost 60% in 2022

Tilray is a Canadian cannabis stock that is down 93% from all-time highs. Let's see if TLRY stock is a…

Read more »