On Monday, Aurora Cannabis (NYSE:ACB) announced that its founder and former CEO, Terry Booth, sold approximately 12.2 million shares in the open market. With this sale, Booth lowered his stake in the company by approximately two-thirds, according to a report from Bloomberg BNN. Booth sold 68% of his stake in the company in a series of transactions through an investment vehicle from March 11 to March 16. He gained 13.6 million Canadian dollars through the stake sale. Booth looks to fund his future business opportunities through the cash earned from his stock sale. After the transactions, Bloomberg BNN reported that Booth still owns 6.16 million shares and options either directly or through his investment company.
On his stake sale, Booth said, “The market volatility with respect to COVID-19 and a number of opportunities in the industry led to me taking some cash to the sidelines,” reported Bloomberg BNN. He also said, “I believe many cannabis stocks including Aurora are undervalued and I will be watching present market conditions unfold. I will definitely be considering buying back in once the dust settles.”
Aurora Cannabis’s stock performance
Amid the sell-off in the US equity market due to concerns about the economic impact of the coronavirus outbreak, the S&P 500 Index and the Dow Jones Industrial Average fell by 12.0% and 12.9% on Monday, respectively. Due to weakness in the broader equity market, Aurora Cannabis stock fell 7.5% on Monday on the Toronto Stock Exchange. After yesterday’s fall, Aurora Cannabis has lost 64.5% of its stock value YTD. Rising debt, depleting cash, and a weak second-quarter performance dragged the stock down.
Also, Aurora Cannabis has underperformed its peers and cannabis ETFs. This year, Canopy Growth (NYSE:CGC), Aphria (NYSE:APHA), and Cronos Group (NASDAQ:CRON) have fallen by 47.2%, 55.3%, and 25.0%, respectively. On the NYSE, Aurora Cannabis is trading below $1 and risks getting delisted. To learn more, read Aurora Cannabis Falls 60% in 2020, Might Get Delisted.
On Monday, MKM Partners lowered its target price from 1.75 Canadian dollars to 1 Canadian dollar. Meanwhile, Bryan Garnier downgraded the stock from “neutral” to “sell” on February 28. The analyst cut its target price from 7 Canadian dollars to 1.1 Canadian dollars.
Since Aurora Cannabis reported its second-quarter earnings on February 13, Cowen and Company, CIBC, and Canaccord Genuity have all lowered their target prices. As of Monday, analysts’ consensus target price is 2.38 Canadian dollars. The target price represents a 12-month return potential of 139.9%. Meanwhile, analysts favor a “hold” rating for the stock. Among the 18 analysts, 12 recommend a “hold,” one recommends a “buy,” and five recommend a “sell.”