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Feb. 9, 2020, 1:23 p.m. EST

Aurora Cannabis stock is falling as CEO steps down, ‘sweeping’ cost-cutting plan announced

Executive Chairman Michael Singer will become interim CEO as company cuts workers, takes goodwill charges

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By Ciara Linnane and Claudia Assis, MarketWatch , Max A. Cherney

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For more, read: Aurora Cannabis stock slides after dilutive bond deal, drags broader sector lower

Related: Aurora Cannabis stock suffers worst day in more than five years, analyst says ‘it would be fair for investors not to believe them

Jefferies analyst Owen Bennett downgraded the stock to hold from buy after Battley’s departure and said the company has lost the trust of investors after repeatedly promising one course of action and then immediately choosing another.

Like its rivals, Aurora has struggled to become profitable following a rocky rollout for legal cannabis in Canada, with red tape hampering the creation of a network of retail stores and allowing the black market to thrive.

See also: All the excuses cannabis companies are making for an ugly crop of earnings

With companies unable to get their product to customers, revenue numbers have disappointed investors and cash piles have dwindled, forcing companies into some desperate measures to raise capital. Many have resorted to measures such as the sale and lease-backs of real estate, or have canceled or revised the terms of previously-agreed deals.

The job-cut news comes just days after rival Tilray Inc. said it was laying off 10% of its workforce, a move that Bennett welcomed on Thursday.

See: U.S. pot retailer MedMen says it is trying to use stock to pay its bills amid cannabis industry’s cash crunch

“Both companies have a relatively clouded path to profitability right now, very large operational footprints, a history of aggressive investments, and will likely need to raise capital in the near future (in our view),” Bennett and Jefferies analyst Ryan Tomkins wrote in a note to clients. “With many factors impacting sales/gross margins arguably less able to be controlled, opex (operating expense) rigor can be a key to profitability.”

Booth’s departure is yet another management shake-up in the sector, coming after Canopy Growth Corp.’s /zigman2/quotes/200603886/composite CGC -0.12% /zigman2/quotes/202205609/delayed CA:WEED +1.55%  Bruce Linton was ousted in July and Aphria Inc.’s /zigman2/quotes/207425803/composite APHA -1.38%   /zigman2/quotes/205566616/delayed CA:APHA +0.52%  former CEO Vic Neufeld was forced to step down.

For all of MarketWatch’s cannabis coverage, click: Cannabis Watch

/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 16.45
-0.02 -0.12%
Volume: 2.04M
July 2, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.00 billion
Rev. per Employee
$115,039
loading...
/zigman2/quotes/202205609/delayed
CA : Canada: Toronto
$ 22.33
+0.34 +1.55%
Volume: 839,928
July 2, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$8.13 billion
Rev. per Employee
$150,142
loading...
/zigman2/quotes/207425803/composite
US : U.S.: Nasdaq
$ 4.30
-0.06 -1.38%
Volume: 2.50M
July 2, 2020 4:00p
P/E Ratio
46.09
Dividend Yield
N/A
Market Cap
$1.15 billion
Rev. per Employee
$147,410
loading...
/zigman2/quotes/205566616/delayed
CA : Canada: Toronto
$ 5.85
+0.03 +0.52%
Volume: 945,529
July 2, 2020 4:00p
P/E Ratio
47.10
Dividend Yield
N/A
Market Cap
$1.56 billion
Rev. per Employee
$190,843
loading...

Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York. Claudia Assis is a San Francisco-based reporter for MarketWatch. Follow her on Twitter @ClaudiaAssisMW. Max A. Cherney is a MarketWatch reporter based in San Francisco. Follow him on Twitter @chernandburn.

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