Aurora Cannabis Inc. (ACB Stock Report) is one of the most prevalent marijuana stocks in the industry. The pot stock has continued to make headlines in the cannabis industry as one of the leaders in the production of cannabis. Recently, the company reported some very big news that resulted in over 150% gains over a several day period. While this type of gain in the cannabis industry is not unprecedented, it is rare. The news comes as a major South Korean investment company known as Korea Investment Corp., decided to purchase stock in Aurora Cannabis, AT&T, GE, and AMD. The fact that the company is willing to put money into a marijuana stock, let alone Aurora Cannabis, is big news but it has major future implications for the cannabis industry at large.
Currently, KIC has assets that come in at around $130 billion. The company has used this money to invest in a wide spectrum of U.S. based stocks. But, the news of it investing in Aurora is major and is one that investors did not expect at all. This news is the primary reason that we saw Aurora shoot up in value so much in the past few days, but it also helped to bring other leading pot stocks up in value as well. With this news comes several hopes about the future of the cannabis industry. But with that, it’s worth exploring this in more detail.
The Details of the Aurora Deal
KIC or Korea Investment Corp. decided to buy as much as 260,000 shares of Aurora Cannabis toward the end of March, bringing its total holdings to around 290.000 shares of the company. Many wonder why the company would take out such a large investment in Aurora as it has not exactly been the biggest winner in the cannabis industry. One analyst stated that “confidence could return if the company can show significant improvement in cash burn and earnings before interest, taxes, depreciation, and amortization over the next couple of quarters.”
Aurora recently reported very high third-quarter numbers which is part of the reason that the company shot up in value so much in such a short period of time. In addition to KIC purchasing shares, the central bank of Switzerland also bought up a large amount of Aurora Cannabis stock in the same time period. Although this may seem small in the scope of the cannabis industry, this has huge implications for the future of the market.
What This Means for the Cannabis Industry
This is a major step forward for the cannabis industry as it has further served to legitimize pot stocks. The cannabis industry is undoubtedly moving forward with a great amount of propensity toward the future. But, legislation has slowed this growth down. Now that major governments and financial institutions are showing interest in the cannabis market, it seems and though we have watched the industry go to the next level.
The short term has also shown a major rise in demand for cannabis which should help Aurora to potentially see more growing numbers in the near future. But right now it is difficult to tell what that looks like as coronavirus has brought a large amount of uncertainty with it. This, however, does remain huge news for the cannabis industry. The hopes are that we can continue to see deals that occur like this that spark the next generation of where marijuana stocks could go.
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