The Aurora Cannabis Craze

If you haven’t sold your Aurora Cannabis shares today at the $8 range then it means you are okay with the idea that they are worth more than Canopy Growth. You can make some rationalizations that is the case but as of now Aurora is behind Canopy Growth.

  • 55,000 sq ft facility compared to Canopy’s 600,000-something current capacity
  • $8 million recent quarterly revenue compared to Canopy’s $17 million
  • Aurora has not been in operation as long
  • If I could make a case for share dilution I would but I’m not smart enough

Yes, a stock price is supposed to reflect the future which Aurora will have if they can successfully build Aurora Sky and successfully grow the yields they promise to. There’s almost no room for error though.

I sold out of Aurora at $4 and $4.63 which will make some think that I’m being a sore loser. Well, yes I am, sort of. I could have bought a new car by now with my missed gains. In hindsight I may have sold out a little early but I would have sold out anyway in the mid $5 range.

Canopy Growth shot up because of the Constellation deal. What reason did Aurora have? I mean, what good reason? It’s just riding the Canopy coat tails with traders assuming the next big partnership will involve Aurora. My guess is that no reputable company will partner with Aurora until they get Aurora Sky running.

My speculation is that the Aurora wave has been sparked by traders missing out on the Canopy rise. If you can’t get #1 then you have to settle for the perceived #2. It’s rumoured that the continuous rise in the stock price is also due to a short squeeze that keeps happening because of the promotional news that traders are buying into. Also, people might be expecting the shares to rise some more if the Cannimed deal goes through.

The mentality that allows you to hold to $8 is the same one that prevents you from selling. It’s going to keep going up or it won’t go down. I’m obviously bad at predicting so who knows what’s going to happen. It just doesn’t make rational sense to me.