Shares of marijuana producer Aurora Cannabis (ACB) - Get Report plunged on Friday after the Canadian company announced a dramatic restructuring that involves the departure of hundreds of staffers, including its CEO.
Aurora Cannabis stock was down more than 15% in morning trading in New York on Friday after the Edmonton-based company revealed that its CEO, Terry Booth, will retire effective immediately, and that it will eliminate some 500 staff positions, of which roughly 25% are corporate positions.
The announcement comes as cannabis and cannabis-product producers and distributors struggle with oversupply, lack of demand, and a more general distaste for all things pot-related, specifically among investors but more generally among the pot-consuming public – despite widespread legalization of the green weed in Canada in 2018 and more recent U.S. state approval of the plant last year.
Aurora said Executive Chairman Michael Singer has been appointed interim CEO and a search for a permanent successor is underway. Booth will remain a director and become a senior strategic adviser to the board, which will gain two new members: Lance Friedmann and Michael Detlefsen.
The company previously announced plans to cut its capital costs to below $100 million for the second half of fiscal 2020, but Thursday's announcement also revealed that Aurora expects to report additional impairment charges of between $190 million and $225 million, and "goodwill" write-downs of between $740 million and $775 million.
“These changes, along with the financial transformation which we are undertaking, should clearly demonstrate to investors that Aurora has the continuity, strategic direction and leadership it needs to transition from its entrepreneurial roots to an established organization well positioned to capitalize on a global growth opportunity,” Booth said in a statement.
"Industry-wide management changes are a telling sign that the industry has matured some (though not fast enough), and gotten competitive enough, that founder-led strategies aren't going to cut it in a capital constrained backdrop," Cowen and Co. analyst Vivien Azer said in a research note.
As of late September 2018, Aurora Cannabis had eight licensed production facilities, five sales licences, and operations in 25 countries.
Shares of Aurora Cannabis were down 15.95% to $2.24 in morning trading on the New York Stock Exchange. The stock has fallen some 83% since reaching a 52-week high of $10.32 in March 2019.