Top Cannabis Stock Surpasses Apple Among Millennial Investors

Top Cannabis Stock Surpasses Apple Among Millennial Investors

If there’s a battle between the iPhone and weed, guess which one is winning among millennials? The green rush is on, especially for those under 40. Robinhood is one of the top trading apps for millennial investors, and the top stock held by millennials on this app is Aurora Cannabis. More young investors on Robinhood hold this stock than behemoth Apple, which was their favorite stock until toppled by the cannabis company.

Aurora Cannabis (“ACBFF”) currently has operations on five continents, totaling 18 countries, with an expected production capacity of half a million kilos of marijuana annually by next year. The Alberta-based company currently employs 1,500. Currently, it has eight licensed production facilities and five sales licenses. The stock’s market cap is just under $7 billion.

The company was founded in 2006, and its first facility was also Alberta’s first facility. Another first: In 2014, Aurora Cannabis became the first producer in Alberta to receive a cannabis growing license. Not long afterward, Aurora Cannabis received a license to grow medical cannabis from Health Canada.

Coca-Cola Connection and More

In September, it was reported that Coca-Cola was in discussions with Aurora Cannabis to market beverages containing CBD oil, which does not contain the psychoactive components of cannabis. Aurora Cannabis, trading on the Toronto Stock Market, ratcheted up 15 percent on the news. Just a month later, Aurora Cannabis went public on the New York Stock Exchange.

As more states legalize recreational cannabis, Aurora Cannabis is poised to become a major player in the market. That’s not all. In January, Congress passed the Farm Bill, legalizing the production of hemp, which is a source of CBD oil and other non-psychoactive cannabidiols. Aurora Cannabis announced it plans to produce CBD oil from hemp, and the result was another 37 percent rise in its share price.

An Undervalued Stock?

In spite of its recent meteoric rise, there are some investors who believe Aurora Cannabis is still undervalued. While large cannabis companies have all done well recently, many are considered overvalued. Aurora Cannabis is the exception.

First, it has a 30 percent market share of all cannabis products in Canada, where weed became legal as of July 1, 2018. In British Columbia, Aurora Cannabis manufactures the four best-selling cannabis products. In the last quarter, Aurora Cannabis posted gross margins of 70 percent, among the highest in the industry.

The Aurora Cannabis Downside

There is a possible downside to Aurora Cannabis’ growth potential. Rivals such as Canopy Growth Corporation and Cronos have received big investments from alcohol and tobacco companies – Constellation Brands for the former, and Altria for the latter – that’s not the case with Aurora Cannabis.

It doesn’t have the same investment resources as its competitors. Once it receives a large investment from a major consumer company, and odds are good that will occur, its stock is less likely to remain undervalued. Who will provide this huge cash infusion and the complementary nature of the business remains to be seen.


David Kani

David Kani is a Newport Beach, California based business lawyer with a focus on cannabis companies, their investors, employees and cannabis-related litigation.
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