Canopy Growth (CGC) Stock: Falling Hard On Earnings Error

Canopy Growth Corp (NYSE: CGC) is having a rough start to the trading session in the pre-market hours this morning, and for good reason. The company issued a press release informing investors that it had misquoted its EBITDA loss on its most recent earning report. Today, we’ll talk about:

  • The error in the figure;
  • what we’re seeing from the stock; and
  • what we’ll be watching for with regard to CGC ahead. 

CGC Announces Earnings Reporting Error

As mentioned above, Canopy Growth is having a rough start to the trading session this morning. The company, the largest in the cannabis space by market cap, restated a metric from its fiscal third-quarter and nine-month earnings that was released just last week. 

In a press release issued early this morning, the company said that the nine-month adjusted EBITDA loss was not stated correctly. In fact, on the report, the figre came in to C$69.0. However, the correction shows that the adjusted EBITDA loss should have been reported by CGC as C$155.2 million. 

In the release, CGC explained the issue as a formulation error. Here’s a key snippet from the release:

The correction of the Adjusted EBITDA loss for the nine months ended December 31, 2018 from $69,006,000 to $155,154,000. The correction was made due to a formula error in the spreadsheet supporting the year to date Adjusted EBITDA loss calculation. The Adjusted EBITDA loss for the three months ended as December 31, 2018 was correct as reported, as were all prior quarters as released.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Canopy Growth Corporation, the news proved to be negative. After all, according to the press release issued today, losses were far wider than expected on an EBITDA basis. 

Considering this, it’s not a surprise to see that upset investors are pushing the stock down in the market. As is just about always the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (7:53), CGC is trading at $44.81 per share after a loss of $1.46 per share or 3.16% thus far today. 

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on CGC. In particular, we’re interested in following the company’s continued efforts to take advantage of the emerging and expanding legal cannabis market. Nonetheless, we’ll keep a close eye on the news and bring it to you as it breaks!

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