Tag: Canopy Growth

  • Canopy Growth Lost $20.3 million

    Canopy Growth Lost $20.3 million

    Canopy Growth Lost $20.3 million

    Canopy Growth lost more than it was estimated. The reasons are numerous.
    Its stock is in big troubles after Q2 earnings report on 

    Canopy Growth (NYSE: CGC),  announced the second-quarter earning a result on Thursday, Nov. 14. Canopy Growth, the largest marijuana stock in the world by market cap, reported it lost $20.3 million over the second fiscal quarter. The loss came from returned cannabis oil products. Simply,  it looks people would like to smoke marijuana but don’t like its oil products and the retailers in Canada returned it to the producer. It looks the rocky quarter is behind the company. The sales dropped, and the price resulted in a loss of $1.08 a share during the quarter.

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    Its shares fell by around 11% in pre-market trading. That was the response to the report. If this trend continues, its price could easily drop by up to 20% this week. Yesterday, November 14, the price was $15.84 which is a decline of over 14%. Bad days for this company with a market cap of $5.285B.

    Canopy Growth Lost $20.3 million

    Net revenue for the second fiscal quarter was $57.8 million, dropping from the Q1 score of $68.3 million. The company’s net loss increased. It is $282.7 million.
    The performance was worse than the experts expected, they were expecting net revenue of $68.4 million and a net loss of $0.31 per share.
    The expanding market for medical cannabis outside improved 72% over Q1 to $14 million. The same came from recreational cannabis sales – an increase of 24% to $10 million.

    What tends to go wrong, will go wrong

    Canopy Growth’s Q2 report exposed two modest but positive improvements: the gross cannabis revenues grew by 2% and the company closed this period with $2.04 billion in cash, its equivalents, and securities. But that’s all.
    Canada’s legal marijuana market has problems that influence all authorized cultivators. Company’s CEO Mark Zekulin stated: 

    “The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market”

    The thing that went wrong is that Canopy took a huge $24 million restructuring debit. To add more pain, the company posted an inventory charge of $12 million. And its Q2 net revenue is $57.8. Much under Wall Street expectations.
    Zekulin said that the management believes this situation is short-term and “Canopy continues to be best positioned with cash-on-hand, a world-class infrastructure, and a portfolio of intellectual property”. 

     

    Canopy Growth lost, what will happen to the shares?

    Canopy’s shares will apparently continue to fall for several reasons. The company’s valuation continues separated from the rest of the legal marijuana industry. For example, its shares are trading eight times more than the next year’s projected sales despite the fact that the company will end up dropping under those optimistic revenue predictions.
    The various problems of the Canadian cannabis market could need years to be solved. 

    Investors’ expectations that the marijuana legalization will be done in a short time all over the world, firstly in the US, were unrealistic. And it looks like it won’t be soon. This subject has barely been touched on by any of the contenders in the next year’s presidential run. 

    The Canopy Growth stock is at its weakest level since 2017. It has lost over 40% of its value this year. Canopy’s shares are deeply unlikely to bounce anytime soon.

     

  • Tilray Make More Cheerful The Manitoba Harvest

    Tilray Make More Cheerful The Manitoba Harvest

    1 min read

    Tilray Make More Cheerful The Manitoba Harvest 1

    Tilray makes the richest deal in an effort to jump into U.S. CBD market. Tilray buys hemp-food maker Manitoba Harvest for $419M.

    Tilray is acquiring the parent company of hemp-food maker Manitoba Harvest for up to $419 million in a cash-and-stock agreement. Cannabis producer from the Nanaimo quickens its entry into the North American CBD market. This deal will give Tilray ownership of a high-profile brand and one of the biggest hemp-food makers in the world. It also gives Tilray access to Manitoba Harvest’s retail network of 16,000 stores across the U.S. and Canada that includes Costco, Amazon, and Wal-Mart.

    Investors like this Tilray’s arrangement, with shares of the marijuana producer jumping close to 5% in intraday trading. But Tilray’s acquisition of Manitoba Harvest should encourage more than a temporary gain.

    Tilray Make More Cheerful The Manitoba Harvest
    With its new deal, Tilray appears to beat its biggest rivals, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC). It looks Tilray manage to stake its claim in a potentially huge market.

    Tilray Overtakes Aurora Cannabis and Canopy Growth in the U.S. Hemp Market

    The biggest Canadian marijuana producers, all three, weren’t modest about showing their tends to enter the United States’ market. The problem is, marijuana is illegal at the federal level. So, they can’t operate in the U.S. and hold their listings on major stock exchanges in such a situation.

    Hemp is a different story. By definition, hemp is cannabis that contains low levels of the psychoactive ingredient THC. The U.S. legalized hemp in December 2018. That opened the way for the major Canadian marijuana producers to jump into the U.S. hemp market.

    Tilray Make More Cheerful The Manitoba Harvest 2
    Canopy Growth was the first. The company published in January that it had ensured a license to produce and prepare hemp in New York state. Canopy also plans to spend between $100 million and $150 million to build a large-scale hemp production facility in New York.

    Meantime, Aurora Cannabis has been much more careful. CEO Terry Booth said that Aurora would “enter when it’s proper to enter, and when it’s legal to enter into the United States market.”

    Tilray’s smart move

    But Tilray’s acquisition of Manitoba Harvest sets it winning of both of the bigger rivals.

    Tilray’s acquisition of Manitoba Harvest seems to be a smart activity. The deal gives Tilray an immediate position in the North American hemp CBD market.  Tilray is financing the acquisition through both cash and stock. More than 1/5 of the buying price isn’t expected until six months after the transaction closes.

    This acquisition is just the latest exemplar of Tilray’s business courage. The company’s acquisition of Natura Naturals last month boosted its production capacity. That deal was part in cash and part in stock with much of the purchase price associated with reaching predefined quarterly production milestones over a 12-month period.

    Tilray showed an intention to win the total cannabis market. Its entrance into the potentially lucrative U.S. hemp market is the sign of that. The company’s chances of taking a leading role appear to be greater than ever.

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