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Canadian Cannabis Producers Canopy growth (CGC) and Cronos (CRON) both reported unexpected income early on Friday, although income was lacking. Shares of Canopy Growth and other marijuana stocks fell.
The companies released the results as the Canadian cannabis industry faces stiff competition and tries to shed weaker results earlier this year that executives blamed on coronavirus restrictions. Recent data has also shown signs of slowing sales growth.
Canopy Growth gained 84 cents per Canadian share, beating estimates for a loss of 26 cents per share. Net income of C $ 390 million included non-cash changes in fair value of $ 601 million. Revenue increased 23% to C $ 136.21 million, below views of C $ 152.63 million.
Meanwhile, Cronos made a profit of 15 cents US, beating views for a loss of 10 cents a share, as revenue jumped 58% to $ 15.6 million, missing forecast of 18.6 millions of dollars.
The company has also appointed Bob Madore as CFO, effective August 9, succeeding Jerry Barbato.
Cannabis stocks
Canopy Growth stock fell 3.3% to 18.50 on the stock market today. The stocks have a low composite rating of 9. Their EPS rating is also low, at 17. The stock’s relative strength line, which compares its performance to that of the S&P 500, has fallen sharply this year, after the community Memes stocks helped catapult marijuana stocks up early this year.
Cronos fell 2.7%. Among other Canadian stocks of marijuana, Tilray (TLRY), which released results last week, lost 1.1%.
Aurora Cannabis (ACB) slipped 2%, and Hexo (HEXO) dropped 3%.
“Double headwinds” for CGC actions
Canopy, when it released its latest round of results in June, lost more than expected and said blockages could continue to haunt its recreational activity. Its overall market share has fallen. The provinces, which store the produce of cannabis producers before it goes to dispensaries, are reducing their stocks.
Stifel estimated that from April to June, Tilray was the leader of the retail market in Canada, with 12.5% control of it. Canopy was second, with 11.6%.
However, Canopy said in June that it was “on track” to achieve positive Adjusted EBITDA – or earnings before interest, taxes, depreciation and amortization – in the second half of this year. Analysts have questioned this target. The company is trying to focus more on premium cannabis products.
As Canopy backs down, celebrity collaborations with Seth Rogen and Drake – deals made when the expansion of the company’s previous leadership was in high gear – have fallen apart.
“Canopy has two headwinds in Canada as weak market share and inventory cuts by provincial boards appear to be a bigger drag than expected,” Piper Sandler analyst Michael Lavery said in a research note. last month.
Competition in Canada has been intense, with the arrival of new growers hampering weed growth and prices for one company.
Tilray, when it released its results last week, said store restrictions in Ontario, Alberta and British Columbia during the quarter limited many customers to online shopping.
Online, according to management, customers were buying weed based on price rather than other features. Tilray CEO Irwin Simon said preferences will move away from prices as the economy reopens.
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