Aurora Cannabis (NYSE: ACB) joined an exclusive group of cannabis companies that publicly trade on the New York Stock Exchange (NYSE) within the United States this week on October 23rd. The company’s initial reception to the public resulted in an intraday low of -15.07%. The company’s stock then increased from its low to just over $8 per share, but closed to an 11% loss in value at $7.70 per share.
An industry report by the credit rating agency DBRS Ltd. is a suspected cause to the drop in value by David Kideckel. David, who is an analyst at AltaCorp Capital, in a note said, “We view yesterday’s sell-off as a consequence of DBRS’s bearish report…”. The “bearish” report made by DBRS changed the rating of the cannabis industry in Canada to a b-rating, which is also considered a non-investment grade rating.
The company’s debut on the NYSE was not unnoticed by American investors. Volume of trades that occurred on its debut totaled to a near 32 million shares more than its former daily average of 8 million shares on over-the-counter markets. A similar ferocity came from the Toronto Stock Exchange (TSX) came in full effect on the 23rd and more than doubled the average trade volume to 75 million shares.
Despite the initial reception there are still several factors that keep ACB stock a favorable option in the long term with the main one being its previously reported talks with Coca-Cola. It was reported in mid-September the company has had “serious talks” with Coca-Cola (NYSE: KO) to create a beverage that is infused with cannabidiol (CBD). CBD is the non-psychoactive ingredient in cannabis and is unlike tetrahydrocannabinol (THC).
It is possible that a deal between Coca-Cola and Aurora Cannabis will be struck within the near future because of Aurora’s unique focus on medicinal cannabis products and its ability to meet potential demand by Coca-Cola. The company’s recent acquisition closure with MedReleaf earlier this year totals Aurora’s estimated annual production at 570,000 kilograms (1,256,634.89lbs) without the addition of ICC Labs that the company acquired in September of this year. ICC Labs could bring the total annual production of Aurora Cannabis to 700,000 kilograms, or close to 1,543,235lbs.