Opinions Frank Mersch
Aurora CannabisACB.TOSELLJun 15, 2018
Frank MerschUnknown
$9.06
Stock price when the opinion was issued
$4.96
As of May 29, 2026. Market Open.
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BUY
They each have their own strengths. He would pick Canopy (WEED-T) because they are the 800 lb gorilla. Aurora has lots of news about balance sheet challenges but they have low costs that he thinks will still come down further.
DON'T BUY
He feels all cannabis stocks are gambling stocks. A maturing debenture is expected to keep downward pressure on the share price. There is no assurance that any existing company will be a survivor -- it is simply too early. No one is making money in this space. Without being able to predict revenues and expenses, it is too risky. He would stay away from these.
DON'T BUY
They're reporting soon. There's a lot of oversupply in the sector; the black market sells cheaper weed and legal distribution is tight. This industry is still evolving. There was a lot of froth before in this space. Also, the laws keep changing. Weed companies aren't making money. She's sitting on the sidelines.
DON'T BUY
Cannabis? He is fortunate that they have not participated in the cannabis space over the past year. It is just too difficult to determine who will be the winners in this space just yet. A lot of companies will short on cash. ACB has a $200 million debenture coming due in March 2020, which will have to be refinanced as the strike price is well above current prices. Stay away from ACB. He would not buy anything in the space.
Don LatoNo
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COMMENT
Short this to $1? $4.50 is its book value and technical support. Has a strong balance sheet, but it has no earnings or fair market value. We're at the stage in cannabis where these stocks have to prove they can survive as a business. Don't short this anymore. The price is so low it's starting to look attractive.
DON'T BUY
His weed exposure is through Constellation Brands which owns Canopy--this is less risky than owning cannabis stocks. The valuation on the entire sector rose way too high in 2017-8. Now, the industry is feeling growing pains, with unexpected surprises in working with governments. Generally sin stocks do well long term, but the next year or two will be challenging.
Jamie Murray No
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They have been acquiring a lot of businesses. They are managing a growth profile. Bu you should be concerned about the dilution. There are concerns that they will do underwritings and go lower. He is short. He is long others in the space. Cannabis is quite different in Canada than in the US. You can’t do the edibles. You are just a grower/distributor and trying to develop a brand without advertizing. It is going to b a different approach for a number of years. The future growth is in the edibles. See HMMJ-T. The bulk of the group is at risk. We have not seen anybody process in bulk because it is still illegal to produce.