Canopy Growth (CGC) Stock: Tumbles On Earnings

Canopy Growth Corp (NYSE: CGC) is off to a pretty rough start in the trading session this morning, and for good reason. The company reported its financial results for the fiscal second quarter, missing expectations and leading to concerns. Today, we’ll talk about the financial report, what we’re seeing from CGC as a result, and what we’ll be watching for with regard to the stock ahead.

CGC Reports Q2 Financial Results

As mentioned above, Canopy Growth is having a rough start to the trading session this morning after the company reported its financial results for the second fiscal quarter. Here’s what we saw from the report:

  • Net Loss – Net losses came in at C$330.61 million. That works out to about C$1.52 per share. In the same quarter last year, the company reported a net loss of C$1.61 million or C$0.01 per share.
  • Revenue – In terms of revenue, CGC missed the mark yet again. During the quarter, the company generated C$23.3 million. While that figure showed a 33% year over year gain, it missed analyst expectations of C$60.0 million.
  • Sales And Harvest Stats – During the quarter, sales of oils rose to 34% of product revenue from 18% one year ago. The company also harvested 15,127 kg of cannabis, representing a 265% growth. Cannabis sold increased to 2,197 grams, a gain of 9%. Finally, the average selling price per gram came in at C$9.87, a gain of 24%.

In a statement, Bruce Linton, Chairman & Co-CEO at CGC, had the following to offer:

With extensive investments over the past year, including most notably in the second quarter, in branding and retail development, our entrance into the retail cannabis market has been a success with our SKU assortment obtaining over 30% listings market share in multi-store physical retail store networks nationwide. With substantial product inventories on hand, new product formats coming to market as planned, a captive sales force driving increased demand through physical retail stores and increasing internal and channel efficiencies, we believe based on market conditions today that we will attain significant and sustainable market share of the Canadian recreational market.

With business opportunities expanding globally, we continue to make significant investments in building our international team and footprint including through multiple acquisitions in Latin America completed during the quarter. The completion of, to our knowledge, a world first Canadian export of a US federally legal DEA permitted product, and the announced acquisition of US federally legal hemp R&D specialists, ebbu, are critical stepping stones for our broader entrance into the US market when it is federally-permissible to do so.

With global management infrastructure in place, the Company is building an international platform in order to drive medical market growth, which will in turn drive innovation applicable to recreational cannabis markets. This approach requires large-scale production capacity, value-add processing, diversified intellectual property, and clinical research – all things we have prioritized and invested heavily into this past quarter.

What We’re Seeing From The Stock 

With the financial results missing expectations on every point, investors are pretty upset at the moment. That can be seen in the price of Canopy Growth as the stock falls. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:01), CGC is trading at $35.10 per share after a loss of $3.38 per share or 8.78% 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 story surrounding the company’s growth in Canada and on a global space. Remember, these financial results were results from before the Canadian recreational cannabis market opened. The company is likely doing far better now. Also, with recent investments in global infrastructure, the company has set a solid foundation for growth ahead. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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