Aurora Cannabis Stock Skyrockets After Posting Earnings

Shares of Aurora Cannabis (TSX:ACB)(NASDAQ:ACB) soared an incredible 45% on Wednesday.  While the stock isn’t at a 52-week high, this is the highest that’s it been at since November. The stock had been struggling since the start of the year but with this latest surge, it’s now up 27% thus far in 2025.

The reason for Aurora’s rally is that the company reported encouraging earnings on Wednesday. The business showed many signs of progress in growing its operations. Here are the main takeaways from the earnings report:

Revenue totaled $88 million and rose by 37% year over year

For Aurora, growing its business has been a challenge, particularly in the highly competitive cannabis market. But with the company expanding its operations internationally, that has enabled it to reach more customers. Many cannabis companies have been focused on growth opportunities in the U.S. but Aurora, however, has been prioritizing opportunities in international markets as a way to expand.

Positive free cash flow totaled $27 million

A big success for Aurora during the quarter was that it generated positive free cash flow, which is what many cannabis companies struggle to do. Often, due to high competition in the cannabis industries, companies burn through cash. Not only did Aurora not do that in its most recent quarter but it generated plenty of free cash. A year ago, during the same period, its free cash flow was a negative $5 million.

However, investors should keep in mind that cash flow can fluctuate significantly from one period to another, and while the company’s free cash was encouraging this period, it could look much different in later quarters; it’s important to look at a much longer-term trend when it comes to cash flow. In the previous three-month period, for example, Aurora’s free cash was a negative $26 million.

The company posted net income of more than $31 million

Another impressive feat this quarter was that Aurora posted a profit. In the same period last year, the company reported a net loss of more than $18 million. But here too, investors should keep in mind that the company’s earnings fluctuate significantly. Aurora was able to post a profit because it had an unrealized gain on changes in fair value of biological assets, which totaled $70 million. Without that big bump, the company would have easily been in the red this quarter.

However, the good news is that the company’s margins are improving. Aurora’s gross profit before fair value adjustments totaled $47 million, up from $21 million in the prior-year period. With Aurora focusing more on the international market and medical marijuana, where there’s less competition and it can charge higher prices, that has allowed it to boost its margins. And as Aurora continues to expand and grow its international business, this trend could continue, leading to potentially even stronger gross profit numbers in the future.  

Aurora Cannabis: Buy, Sell, or Hold?

Aurora is going in the right direction but this is still an incredibly risky buy. The company wouldn’t have reported a profit without significant unrealized gains. And it’s growing but international markets are not nearly as lucrative as the big U.S pot market is (which is off-limits to Canadian companies due to the federal ban), so its future growth prospects may not be all that strong.

Ultimately, this is a highly volatile stock and these results could lift it higher in the short term, but that might not last in the long run. Investors should be careful with Aurora, and don’t forget — it’s still down 98% over the past five years. There’s still a ton of risk here. Unless you’re comfortable with that risk and the uncertainty facing the business, you may be better off avoiding Aurora, despite its recent quarter.