Canopy Growth (CGC) announced a “strategy reset” targeting specific markets after reporting much-weaker-than-expected fiscal fourth-quarter results early Friday. Marijuana stocks fell, with Canopy Growth stock tumbling.
Canopy Growth Earnings
Estimates: Analysts saw a loss of 26 cents per share vs. a loss of 67 cents in the year-ago quarter. Revenue was seen rising 34% to $95 million.
Results: Canopy Growth lost 3.72 in Canadian dollars. That’s equal to a loss of $2.71 at current exchange rates. Revenue rose 15% to 107.91 million Canadian, or $78.53 million at current exchange rates.
Outlook: Canopy Growth said it’s adopting a “strategy reset” in fiscal 2021. The company “no longer strives to be the first to every market,” but will focus on leading in “select priority markets.” The company withdrew prior milestones for profitability, citing its strategic shift and the coronavirus impact.
During the fiscal fourth quarter, the first wave of the company’s cannabis-infused beverages shipped in March and April. Early this year, Canopy Growth released its first cannabis-infused chocolates and vape pen products in Canada, where the next phase of legalization has begun.
Canopy Growth stock rose early this month after major investor Constellation Brands (STZ) increased its stake to 38.6% with the exercise of nearly 19 million warrant, offering a vote of confidence to a company that is scaling back after racking up steep losses.
Many cannabis shops, either via physical dispensaries, online orders, or pickup or delivery service, remained open during the coronavirus pandemic as essential businesses. Canopy Growth temporarily closed stores in Canada but offered online orders.
Still, analysts have been concerned about weak cash positions among large marijuana stocks as they used money to expand operations the last two years.
Follow Gillian Rich on Twitter @IBD_GRich for business news and more.
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