Last week, Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB) shares fell following weak fiscal second-quarter earnings from Canopy Growth Corp. (NYSE:CGC) (TSX:WEED), as well as weaker fiscal first-quarter numbers of its own.
According to the Motley Fool, this drop in share price made it “one of the worst-performing mid-cap stocks currently listed on the New York Stock Exchange (NYSE) this calendar year.”
To add insult to injury, at least five different law firms have now launched investigations into Aurora Cannabis for a variety of allegations including securities fraud and more.
Hagens Berman Sobol Shapiro LLP
Hagens Berman, one of the firms behind the recent $758 million class action settlement with Hyundai Motor America and Kia Motors America, announced that it opened an investigation into Aurora Cannabis regarding potential breach of federal securities laws.
“We’re focused on recovering investors’ losses and whether Aurora Cannabis misled investors about its operations and growth initiatives,” said Reed Kathrein, the Hagens Berman partner leading the investigation.
According to the statement issued by Hagens Berman:
“Aurora Cannabis has repeatedly referred to itself as a “global leader in cannabis revenues, cannabis production, research, innovation, and international market development” and promoted its “continued transparency and disclosure.” As recently as Oct. 3, 2019, the Company provided investors a construction update on its operations and growth initiatives, including on its Aurora Sun and Aurora Nordic 2 projects, touting that Aurora continues to progress construction of the “Sky Class” facilities.
But on Nov. 14, 2019, Aurora Cannabis shocked investors when it announced wider than expected losses and that revenue had declined by 24% quarter over quarter. In addition, the cash-strapped Company disclosed it would be halting construction immediately at its Aurora Nordic 2 and Aurora Sun facilities.
MarketWatch reported, “[a]nalysts said that investors had a reason for anger and distrust.” In downgrading the stock, an analyst at Jeffries reportedly noted, “With possible cash pressures evident, announcing ceased construction at facilities despite a press release just 6 weeks ago praising progression, and now EBITDA (and cash) positive looking unlikely this year, it would be fair for investors not to believe them.”
The Rosen Law Firm P.A.
The Rosen Law Firm, one of the major players behind obtaining a $250 million settlement for Alibaba Group Holding Limited investors, is also investigating potential securities claims on behalf of shareholders of Aurora Cannabis Inc. resulting from allegations that Aurora may have issued materially misleading business information to the investing public.
In its press release, the Rosen Law Firm cited Aurora’s recent financial results, halting of construction of the Aurora Nordic 2 facility in Demark, and its deferring final construction of its Aurora Sun facility, as well as the fact that it would open an early conversion window for holders of CA$230M of convertible debentures.
Upon taking a deeper dive into the repayment structure for the convertible debt, I came across a recent piece from Night Market Research which went as far as to describe the financing structure as a “death spiral“.
The Schall Law Firm
Just like the Rosen Law Firm, the Schall Law Firm is also investigating Aurora Cannabis Inc. for violations of securities laws following the poor quarterly performance, as well as the halting of construction for its Denmark facility.
The Law Offices of Howard G. Smith
The Law Offices of Howard G. Smith, the firm behind the recent lawsuit launched against Sundial Growers, Inc. (NASDAQ:SNDL), also launched an investigation on behalf of Aurora Cannabis Inc. shareholders concerning the company and its officers’ possible violations of federal securities laws.
Just like the firms above, the Law Offices of Howard G. Smith cited steep declines in revenue and the announcement that plans to finalize construction of additional grow facilities in both Denmark and Canada have been delayed.
Glancy Prongay & Murray LLP
Last, but not least, Glancy Prongay & Murray LLP also launched an investigation for the very same reasons as many of the cases above.
Conclusion
Despite these new investigations, shares of Aurora Cannabis Inc. are up 4.63% intraday as of this moment. Be sure to subscribe to Aurora Cannabis Inc. stock updates here so you never miss an important development.
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