Aurora Cannabis Files For NYSE Listing - Who's Next? (NASDAQ:ACB) (2024)

(All dollar figures listed herein are Canadian dollars.)

ACB data by YCharts

Aurora Files for NYSE Listing

On Friday, as I announced in my Seeking Alpha blog to followers, Aurora Cannabis (ACBFF) filed for an American stock listing on the New York Stock Exchange, filing a Form 40-F with the SEC.

(Aurora Cannabis Form 40-F from SEC.gov)

Aurora should be traded on the NYSE very quickly: the company anticipates the listing will be complete "before the end of October 2018." For Canopy Growth (CGC), it took eight days from their Form 40-F filing (May 16) to the beginning of trading on the NYSE (May 24).

From that timing, investors might expect Aurora to trade on the NYSE some time during next week (the week of October 15).

Shares of ACBFF will be automatically converted to shares of Aurora's NYSE listing, which will trade as "ACB":

"Aurora's shares will trade on the NYSE under ticker symbol 'ACB', the same symbol the Company's common shares currently, and will continue to, trade under on the Toronto Stock Exchange (TSX). Aurora will also continue to trade on the OTCQX under the ticker symbol 'ACBFF' until completion of the NYSE listing. Upon receipt of all required approvals and completion of the formal listing process, the Company will publicly announce its first trading date on the NYSE. Aurora furthermore intends to voluntarily delist its shares from the OTCQX at such time."

See Also

ACBFF - Aurora Cannabis Stock Price - Barchart.comAurora Cannabis Inc fka ACBFF Message Board | InvestorsHubACBFF - Aurora Cannabis Stock Price History - Barchart.comACBFF - Aurora Cannabis Stock Profile - Barchart.com

Aurora Cannabis Press Release (October 9, 2018)

Why American Listings Matter

(Yahoo Finance; October 5th price chart for TSE:ACB)

Aurora Cannabis may benefit from a US listing thanks to broader access to the capital markets, while investors may benefit from a US listing thanks to a trading premium on US-listed cannabis companies.

American listings help a wider assortment of investors buy Aurora shares. Further, US listings help Aurora access a larger pool of capital markets, perhaps enabling it to raise more money and at more advantageous rates.

The majority of large Canadian companies are cross-listed on US markets - this is not a phenomenon limited to cannabis. For example, I recently wrote about Canadian-market ETFs (BBCA, EWC) in "Comparing The Canadian Market ETFs: BBCA Vs. EWC", and noted that each of the top ten holdings of those ETFs were available on US exchanges, and ~90% of the top twenty holdings. Obtaining a US listing is not limited to cannabis companies.

Importantly for existing shareholders, American-listed cannabis companies tend to trade at a premium. Today, there are three Canadian cannabis companies trading on US markets:

• Canopy Growth is cross-listed on the Toronto Stock Exchange (TSE:WEED) and the New York Stock Exchange (NYSE:CGC). This means that it was originally publicly-traded in Canada, and later added the US listing.
• Cronos is cross-listed on the Toronto Stock Exchange (TSE:CRON) and the NASDAQ (NASDAQ:CRON)
• Tilray (TLRY) became the first US cannabis IPO when it listed on the NASDAQ back in July 2018. Tilray does not have a Canadian listing. Because of Tilray's IPO structure (low float), I consider Tilray a very dangerous investment - see "Avoid Tilray And Buy Literally Anything Else Instead".

Consider the EV/sales of the five most valuable cannabis companies, by enterprise value:

(Author; revenue estimates are for next year from Yahoo Finance analysts; enterprise values are based on my own calculations; Tilray revenue and enterprise values converted to Canadian dollars)

Canadian cannabis companies which are offered on US exchanges consistently trade for a premium over peers that are not listed on a US exchange. The cheapest US-listed Canadian cannabis company is still ~two-thirds more costly than Aurora Cannabis.

By gaining access to US markets, Aurora Cannabis hopes to close this gap with Canopy Growth. At least a bit of this gap was closed on Friday when Aurora filed their Form 40-F, as TSE:ACB shares rose from ~$12 up to $12.80, and currently sit at ~$13.30 today.

Who Is Next?

Other Canadian cannabis companies are going to follow Aurora to US market listings. In order to be listed on US exchanges, companies need to, at least, divest their US assets and to ensure they have enough independent members on their boards of directors. Divesting US assets and making the board more independent should both be seen as clues that a company may be pursuing a US listing.

Recently, rumors have swirled about the potential of several companies to move to US exchanges. These include:

CannTrust has been rumored to move to a US exchange. As of today, nothing official has been announced. I have full, detailed covered of CannTrust available on The Growth Operation (free trials available now). I like CannTrust as an investment and own shares of the company.

Consistent rumors have also alleged that Aphria is gearing up for a US listing.

(Aphria Management Information Circular, September 24, 2018)

Perhaps the best evidence for such a strategy is from Aphria's own press releases: Last month, Aphria divested its U.S. assets to Liberty Health Sciences. Aphria further specifically cited to NYSE rules when describing its goal of an independent board - a telling reference for shares that don't trade on the NYSE.

Other companies are also likely to seek a US listing in the near future. Given how widespread cross-listings are in other Canadian industries, I expect most large Canadian cannabis companies will seek a cross-listing over the next couple years.

Takeaways

Aurora Cannabis is likely to be listed on the New York Stock Exchange within the next couple weeks. The filing of Aurora's Form 40-F has bumped share prices up ~10%, going from $12 on Friday before filing to $13.30 today. That increase - and more - may be durable since American-listed shares trade at a premium over Canadian-listed counterparts.

Other Canadian cannabis companies are likely to follow in the footsteps of Aurora Cannabis. At least CannTrust and Aphria have been rumored to be seeking cross-listing. If those companies - or others - are able to gain a US listing, it could provide a one-time boost to share prices provided that the US listing premium remains in tact.

This is a good step along Aurora's path to becoming a global player in cannabis, as I described in depth in "Aurora Cannabis: This One Is 'Just Right'".

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Members of The Growth Operation, my exclusive community, receive:

• Exclusive access to my in-depth research articles on smaller cannabis companies.
• Access to my Model Cannabis Portfolio.
• Up-to-date news and updates on cannabis companies.
• Access to my full, live portfolio.

This month only, membership is 25% off for your first year. Prices are going to rise come October, so sign up for a free trial today. (If prices rise later, early members get grandfathered prices, forever.)