Aurora Cannabis (NYSE: ACB) is under a lot of heat these days as it comes off yet another disappointing quarter. The stock lost more than half of its value in 2019, dropping 56% during the year, which was much worse than cannabis stocks a whole did, as the Horizons Marijuana Life Sciences ETF declined by a more modest 37%. And unfortunately, Aurora isn't off to a good start in 2020 as news of CEO Terry Booth resigning and the company announcing 500 layoffs and "modest to no growth" for the upcoming quarter has many investors worried that things may get even worse. But as bad as things may look, there are three reasons the stock may not be a bad buy today.
The stock market is all about beating expectations, and whether Aurora is profitable or not, or doubling its sales, is irrelevant. Analysts evaluate stocks against projections, and with Aurora announcing a flurry of bad news, it's effectively lowering expectations for upcoming quarters. While there's no guarantee Aurora will beat or even meet those expectations, it certainly puts the company in a much better position to be able to do so.
Sales of edibles and the launch of more pot shops in Canada should make for a stronger year for Aurora in 2020. Those two factors alone will help the company reach more customers, and that's why it's possible the company may be sandbagging expectations in an effort to make 2020 a much stronger year for the stock. There's nothing like a solid earnings beat to send a stock soaring, especially in the highly volatile cannabis industry.