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Why Aurora Cannabis Stock Jumped Over 30% Today

What happened

After jumping 32% earlier in the session, shares of Canadian pot company Aurora Cannabis (NYSE: ACB) remain up 21% as of 10:50 a.m. EST. The stock has been on a bumpy ride this year. Though shares are down 65% year to date, they have jumped about 80% just since the U.S. election on Nov. 3.

So what

And the election is still moving shares today. News that the Trump administration has officially cleared the way for a transition to the Biden presidency gives investors in marijuana companies more optimism for the industry.

Image source: Getty Images.

Investors in pot stocks cheered the election for several reasons. Five states -- New Jersey, Arizona, Mississippi, Montana, and South Dakota -- had ballot initiatives related to legalizing marijuana, and all five passed.

Aurora shares more than doubled in just the election week alone. Part of the rise was also a belief that a Biden administration would be friendlier toward federally legalizing weed. That's not something investors can count on, though.

Now what

Aurora has spent much of this year restructuring its business and raising capital as its losses mount. The changes included cutting jobs, closing operations to consolidate production, and selling additional stock to raise money.

In its recently reported fiscal 2021 first quarter, Aurora said it had revenue of about $52 million. This was a drop from the prior-year period, which isn't something investors in a growth industry want to see.

The potentially good news for investors is the company is targeting to reach positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in its next quarter. That's where investors should be focused in the near term.

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Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.

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Learn more

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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