Canopy Growth Corp (CGC) Stock: What Earnings Mean For Cannabis

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Canopy Growth Corp (NYSE: CGC) is having a strong start to the trading session after releasing its financial results for the fiscal third quarter. The report proved to be positive, but not just for the company. Ultimately, it proved to be a point of validation for cannabis investors across the board. Today, we’ll talk about:

  • The earnings report;
  • why this is important for the cannabis industry as a whole;
  • what we’re seeing from CGC stock as a result; and
  • what we’ll be watching for ahead.

CGC Releases Earnings

As mentioned above, Canopy Growth is having a strong start to the trading session this morning after announcing its financial results. Here’s what we saw from the report:

  • Losses – In terms of losses, the company said that losses for the quarter came in at $0.38 per share. This figure is likely holding the growth back as a year ago, the company reported earnings in the amount of $0.01. While analysts expected a loss, the reported loss was wider than the $0.13 per share analysts expected to see.
  • Revenue – While losses proved to be a source of pain, revenue came in well ahead of expectations, exciting investors and allowing the stock to move upward. During the quarter, CGC generated revenue in the amount of $83 million. While analysts expected growth from the $22 million reported last year, they were only guiding for revenue in the amount of $61 million.

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

Our successful first full quarter with recreational sales in Canada reinforces our long held strategy of making meaningful investments early in order to secure market share. With a strong cash position, we added strategic assets and IP through acquisitions to accelerate the sophistication of our inputs with ebbu, and our consumer-facing outputs with Storz and Bickel.

The Canadian recreational cannabis market will be dominated in the long term by businesses delivering excellent products and consumer experiences. Sales from the first wave of products and retail environments launched in the third quarter demonstrate that we are capturing consumers’ attention.

We have developed an unprecedented and unparalleled fully integrated platform at scale and will continue to expand by making strategic production investments in regions with federally permissible paths to market for our cannabis and hemp offerings. We believe this strategy will develop a significant and sustained return on invested capital over the long-term.

Why This Is Huge News For Cannabis As A Whole

Sure, positive revenue growth is good for any company. However, with their earnings report, Canopy Growth Corp has made a statement. At the moment, the regulatory climate surrounding cannabis is changing, with one of the biggest recent changes being the legalization of adult-use cannabis in Canada. 

This is the first full quarterly earnings report issued by one of the larger players in the space since the emergence of the adult-use market in Canada, and the report was great! 

What we saw was revenue that outpaced analyst expectations. This likely means that the demand for cannabis in Canada is higher than analyst projections, boding as great news not only for CGC, but for the cannabis sector as a whole. 

Considering the strong report out of CGC, chances are that the other key players like Aurora Cannabs, Tilray, Cronos, and more, will have positive reports to release of their own. 

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, the news proved to be positive. After all, the strong revenue growth shows that the demand in Canada is better than expected. It also shows that the company is successfully capitalizing on this emerging market. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:49), CGC is trading at $47.35 per share after a gain of $1.23 per share or 2.67% 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 as well as the cannabis industry as a whole. With regulatory changes taking place around the world, and strong demand shown in Canada through the company’s earnings report, we believe that there is tremendous opportunity in the global cannabis space. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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