Canada’s recreational marijuana market is valued at over $5 billion Canadian ($3.71 billion) per year, and that means that leading marijuana stocks are poised to see sales skyrocket following legalization last October.
To make sure it gets its fair share of this opportunity, Aurora Cannabis (NYSE:ACB) has been pouring money into acquisitions and greenhouse expansion. Earlier this week, management reported quarterly financial results showing its strategy is paying off with rapid revenue growth. But the results also show the company has a long way to go before it turns a profit. Here are eight facts you need to know following the company’s fiscal third-quarter update.
No. 1: Rapidly rising revenue
The company’s net marijuana revenue increased 305% year over year to CA$65.1 million in the quarter, up from CA$54.2 million in its previous quarter. Recreational sales were CA$29.6 million, up 37% from CA$21.6 million in fiscal Q2. Medical marijuana sales improved 12% sequentially to CA$29.1 million, making this the first quarter in which recreational sales accounted for more sales than medical marijuana at the company.
No. 2: Higher harvests
Aurora’s big investments, including an expansion at its Aurora Sky greenhouse, are paying off in significantly higher marijuana production. In the quarter, it produced 15,590 kilos, up from 7,822 kilos in the prior quarter and 1,206 kilos one year ago. It sold 9,160 kilos, up from 7,000 kilos in the prior quarter, so the company is on track to have plenty of marijuana on hand to drive sales higher this quarter.
No. 3: Stiff competition
Recreational market prices for marijuana are lower than medical marijuana prices, so average prices per gram sold by Aurora Cannabis have been falling as the adult-use market accounts for a larger share of its sales. Last quarter, its average selling price declined 20% year over year to CA$6.40 per gram.