CGC stock could be leading a resurgence in pot stocks after cannabis giant Canopy Growth (TSX:WEED) (NYSE:CGC) surpassed expectations with its third-quarter financial results last Friday.
With the Canadian cannabis market still dealing with the fallout from Aurora Cannabis' (TSX:ACB) (NYSE:ACB) news that it would lay off around 500 staff as well as the retirement of its co-founder and CEO Terry Booth, CGC stock went on an incredible double-digit bull run after Canopy breezed past expectations for its third-quarter results.
The Results
Wall Street had been expecting the world's biggest cannabis firm to report C$104.2 million in revenue and a loss of C$0.38 per share; however, net sales surged to C$123.8 million from C$76.6 million in the previous quarter, while adjusted loss per shares was slightly narrower than expected at $0.35. While the company is still losing money, there is clearly not the same degree of pessimism around CGC stock in comparison with its closest rival in Aurora.
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Less than a year ago, Canopy Growth was making headlines for its own $1 billion-plus losses and high-profile executive departures, so how has it fared so much better than Aurora in the most recent quarter? Mike Lee, Canopy's Chief Financial Officer, believes it is because of "tighter cost controls across the organization," adding that, "we plan to take further steps to reduce our costs and right-size our business to ensure that we can generate a healthy margin profile and cash generation in the coming years." CGC stock is up over 15% following the release of those results.
CGC Stock Primed for 2.0 Gains
With Canopy smashing Aurora Cannabis in almost every metric in the last quarter, this new competitive edge couldn't have come at a better time for the Smiths Falls-based firm. Despite delays in the launch of certain products, Canopy Growth has been rolling out its cannabis 2.0 portfolio in recent weeks. The company shipped its first edible in December, followed by its Tokyo Smoke and JUJU vapes, which have seen strong demand.
Canopy will launch its infused beverages range in the coming weeks, which Forbes has labeled a "game-changer," followed by a whole host of other products over the coming year. CGC stock currently trades for $29.78, well off last year's peak of $70.00, but with closest rival Aurora currently in the gutter, Canopy is in pole position to be 2020's big winner.
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