CGC stock is gaining momentum in Wednesday's session ahead of Canopy Growth (TSX:WEED) (NYSE:CGC) releasing its earnings, which are due tomorrow.
Canopy Growth has seen its sales jump to around 360% following the legalization of recreational marijuana last year. So will this have any impact on the results?
Canopy Growth to Acquire Acreage Holdings
The company is expected to announce the Q4 and FY2019 earnings on June 20, 2019, and investors will be expecting a large revenue growth that can justify Canopy’s huge market capitalization of over $14 billion. The company is banking on beverages and has taken advantage of Constellation Brands (NYSE:STZ) to construct a bottling facility in Ontario. The company got $4 billion from Constellation, an important investment for the company’s long-term strategy.
Before the earnings report expected on Thursday, the company and Acreage Holdings (OTCQX:ACRGF) shareholders will approve a deal that joins the two companies. During the earnings conference, Canopy Growth is expected to discuss the deal in details on how the companies will be working together ahead of expected changes to US federal laws. Acreage is planning to start offering Canopy Growth's Tokyo Smoke and Tweed brands in the US.
CGC stock is trading higher by 1% and now selling at $42.49 on the NYSE. WEED stock is up 0.20% at $56.45 on the TSX.
Q4 2019 Earnings
According to analysts, the company expects losses of up to $95.2 million CAD or $0.25 per share, which is more than last year's loss of $61.5 million CAD or $0.31 per share. The company, however, turned a significant paper profit in Q3 2019 of $74.9 million CAD, which was attributed to the adjusting of the valuation of the company's convertible debt because of the fluctuating stock price. Canopy posted losses of up to $122 million CAD excluding the charge and other things.
Analysts have estimated Q4 revenue to grow to $90.6 million CAD from the $22.8 million CAD that was posted in Q4 2018. In Q3, which was the first quarter of legalized adult recreational use, the company reported revenue of $83 million CAD.
Although marijuana stocks seem to be performing unconvincingly currently, CGC stock has outperformed very well, and its shares are actually 53% up since the beginning of the year. In the last three months, CGC stock has dropped by 8%.
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