What Marijuana Investors Must Learn From Aurora Cannabis' U.S. Debut – The Motley Fool

Marijuana investors have jumped into cannabis stocks, embracing the vision of a more pot-friendly world and looking forward to serving a fast-growing consumer market. Canada's legalization of recreational cannabis sales has highlighted companies that do business there, but smart Canadian companies know that there's a lot of investment capital that will not make the trip north of the border.

That's the key reason Aurora Cannabis (NYSE: ACB) chose to have its shares made more readily available to US investor. By listing on the New York Stock Exchange, Aurora Cannabis sought to make it easier for marijuana investors ̵[ads1]1; both individual and institutional – to take stakes in the growing company.

Aurora Cannabis had its first day of trading on the NYSE yesterday, oct. 23, and in the eyes of many, it was a disappointment. should take away from the debut, that interest in the budding industry is still strong.

Image source: Getty Images.

A big drop on day 1

The main takeaway that most marijuana investors focused on was the fact that Aurora Cannabis shares dropped significantly in their first day of US trading. With over-the-counter trading in the stock that closed the previous day at $ 8.69 per share, Aurora opened almost $ 1 per share lower Tuesday morning. Likeledes as the overall stock market regained ground, the cannabis company could not sustain any upward price move, and shares closed the day at $ 7.70, down more than 11%.

That downward move flew in the face of the hopes of many investors, who had looked for an IPO-like pop in the stock price. Yet there are several reasons to explain the drop:

• The overall stock market suffered a substantial decline in the morning of Aurora's first day on the NYSE, with the Dow dropping about 550 points before recovering later in the day.
• Marijuana Stocks overall have behaved badly since Canadian cannabis became legal on Oct. 17. Many investors attribute that decline to a "sell the news" mentality following the huge run-up in shares in the weeks leading up to the Canadian launch.
• There was no inherent change in Aurora Cannabis' corporate structure, and the Company did not offer new shares as part of its NYSE debut. Med de fleste institutionelle investorer som har klar adgang til Aurora-aktier på Toronto Stock Exchange, var den potentielle virkningen af ​​NYSE-noteringen mindre enn mange havde forventet.

Given the sluggish opening, it's tempting to write off the Aurora Cannabis debut as a nonevent .

The silver lining for marijuana stocks

Perhaps the biggest indicator of success for Aurora Cannabis was the fact that the volume of trading was high. Nearly 40 million Aurora Cannabis shares traded on the NYSE on Tuesday, and that was well above the 8 million share average that the stock had seen on the over-the-counter market. Trading activity on Canadian exchanges was also strong, with 75 million shares changing hands, more than double the typical volume. That shows that interest in cannabis stocks overall remains strong.

And there was good news for Aurora in particular. The NYSE listing gave Aurora Cannabis the impetus to make some key operational moves that should help it implement its broader strategy. That includes last week's news that the key Aurora Sky growing facility at Edmonton International Airport had gained approval for sales from regulators at Health Canada, as well as decisions to simplify Aurora's capital structure and sell off some of its interest in Green Organic Dutchman Holdings .

Do not touch that dial

There is still plenty of uncertainty surrounding the cannabis industry and whether Aurora Cannabis will be able to take on a key leadership role in the development of the sector. But listing on the NYSE was an important moment in Aurora Cannabis' history, and the move should open some new doors for the marijuana company to consider in the years to come. Rett og slett om at være skuffet, bør aktørerne være glad for at selskabet har gått en ny milepæl og er i stand til å utnytte mulighetene på det globale cannabismarked.

Dan Caplinger har ingen position i nogen af ​​de nævnte aktier. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.