Pot stocks are witnessing one of the worst sessions in June, and CGC stock is no different. CGC is tanking on Friday after Canopy Growth (TSX:WEED) (NYSE:CGC), the largest marijuana company by market capitalization, reported worse than estimated fourth-quarter loss.
Increased Losses, but Impressive Revenue
Canadian marijuana firm Canopy Growth is among the largest operators in the industry, currently with the largest market cap. Hence, it was only natural that its latest quarterly results were highly anticipated among investors interested in the marijuana industry.
Canopy’s direct rivals like Tilray Inc (NASDAQ:TLRY), Cronos Group (TSX:CRON) (NASDAQ:CRON), HEXO Corp (TSX:HEXO) (NYSE:HEXO), and Aurora Cannabis (TSX:ACB) (NYSE:ACB) had already declared their results, so investors had to wonder whether Canopy Growth could outdo its peers in Q4. The company finally declared its fiscal fourth quarter results for 2019 on Thursday.
The headline figure was impressive as the company generated $94.1 million CAD on revenues, which reflected a year-on-year rise of a mammoth 313%, and a 13% rise from the previous quarter. Additionally, it managed to beat analyst estimates of $93.7 million CAD as well.
CGC stock tumbled 8% to $40.25 on heavy volume. Other pot stocks are also feeling the heat with ACB stock down 4.30%, TLRY stock down 4.30%, and HEXO stock down 5%.
The lion’s share of sales for Canopy Growth was generated by the adult-use recreational cannabis space in Canada and brought in $68.9 million CAD. To put it into perspective, rivals Aurora Cannabis generated $29.6 million CAD from the same segment during its latest quarter. Canopy's acquisition of German vaporizer manufacturer Storz & Bickel also proved to be effective, as it added a further $34 million to the company’s growth in the quarter.
Despite strong revenue growth, there remain considerable reasons to worry as well. The company made a net loss of $323.4 million CAD, which was a loss of $0.98 CAD a share, and that remains the biggest setback in this quarter. In the prior year period, net losses had stood at $54.4 million CAD.
International medical cannabis gross revenues dropped as well and generated $1.4 billion CAD, which reflects a year-over-year drop of 25%. Last but not least, Canopy Growth’s hold on the medical cannabis market seems to be slipping as it generated only $11.4 million CAD in sales, which is a worrying 41% drop from the previous quarter.
However, despite today's fall, CGC stock is still up about 45% so far in 2019.
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