Benzinga - by Nicolás Jose Rodriguez, Benzinga Staff Writer.
A short squeeze forces investors betting on a stock's decline (short sellers) to buy back shares at a higher price to avoid losses, triggering a price surge. Analyst Faizan Farooque sees this potential in Aurora Cannabis (NASDAQ: ACB) and Beyond Meat (NASDAQ: BYND) due to their recent actions and current market conditions.
Beyond Meat Beyond Meat is facing a challenging environment with persistent inflation, competition from Impossible Foods and a notable drop in plant-based meat revenues.
The company's net sales fell 18%, resulting in a net loss of $155.1 million. Despite these setbacks, Beyond Meat projects sales of $315 million to $345 million for 2024.
To counter these challenges, Beyond Meat introduced Beyond IV, a new product line boasting 75% less saturated fat and 20% less salt than traditional beef, and containing 21 grams of protein per serving.
According to Farooque, the company is focusing on inventory optimization, discontinuing Beyond Jerky to prioritize the more profitable Beyond IV line. Additionally, BYND is cutting its 2024 budget by $70 million as part of its SKU rationalization process. Currently, the stock has nearly 40% short interest and has dropped almost 50% in the past year.
Aurora Cannabis Aurora Cannabis continues to be a notable name in the short-squeeze arena, largely due to marijuana's federal illegality in the U.S. However, Farooque noted Aurora reported its fifth consecutive quarter of positive adjusted EBITDA, with quarterly net sales up 5% to 64.4 million CAD.
The company is also reducing its debt, recently repurchasing 23.1 million CAD in convertible debentures.
Despite these positives, consumer cannabis revenue fell by 21% year-over-year, and adjusted SG&A expenses remained high, according to Farooque.
He explained a reverse stock split in February 2024 aimed to stabilize the stock price, but ACB is still trading at $5.90, well below its 52-week high of $11.5.
The Canadian market's slow growth further complicates Aurora's position, keeping it among the stocks primed for a squeeze.
Cannabis rescheduling seems to be right around the corner. Want to understand what this means for the future of the industry? Hear directly for top executives, investors, and policymakers at the 19th Benzinga Cannabis Capital Conference, coming to Chicago this Oct. 8-9. Get your tickets now before prices surge by following this link.
Photo by Tangerine Newt on Unsplash.
Latest Ratings for ACB
| Nov 2021 | Cantor Fitzgerald | Maintains | Neutral | |
| Oct 2021 | Cantor Fitzgerald | Maintains | Neutral | |
| Oct 2021 | Cantor Fitzgerald | Maintains | Neutral |
View the Latest Analyst Ratings
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