Canopy Growth have been in the headlines this week for different reasons, this time, it isn’t much of a good news as the cannabis-based company’s stock plummeted around 7% after they announced that recreation consumption in Canada went down considerably from the previous quarter.
Canopy announced its quarterly earnings report yesterday after the bell rang and the announcement lead Canopy’s stock to decline as trading opens Friday morning. Canopy Growth Corp. CGC, -8.52% WEED, -8.29% reported Thursday fiscal fourth-quarter net losses of C$323.4 million ($245.2 million), or 98 cents a share, from a loss of C$54.4 million in the year-ago quarter.
The reported loss of C$130 million is yet to include the growth of its stock price in the first three months of the calendar year because of rules regarding the company’s convertible debt. Nonetheless, Canopy claimed an operational loss of C$174.5 million.
But the quarterly earnings report has a more interesting detail to investors and analysts – it revealed that following the legalization of Cannabis in Canada in third quarter last year, the overall revenue of the company grew but sales from recreational cannabis did not.
Canopy Growth co-Chief Executive Bruce Linton said that they attribute the loss in two things: (1) the company’s production in prior quarters; and (2) the retail opening in Alberta and Oregon has been slow.
“Obviously when Alberta needed to pause, in their opinion, the additional licensing of stores and Ontario got going in April, that kind of made the platform static,” Linton said. “What we’re seeing is a lot more stores opening obviously in Alberta and we’re seeing quite a bit more discussion and rumor about whether Ontario will do some more sooner. So the channel is growing.”
The U.S.-listed stock ended the regular session Thursday up 2.2% at $43.71, which gave the company a market capitalization of $15.1 billion in U.S. dollars. Shares have gained 62.7% so far this year, as the S&P 500 index SPX, -0.07% has increased 17.8%.
