Over two months after dismissing Bruce Linton, new Canopy Growth (TSX:WEED) (NYSE:CGC) management offered hope for CGC stock at a Barclays conference.
Tumultuous Summer for CGC Stock
While the cannabis market as a whole has had a tumultuous few months, CGC stock has felt the burden more than most as the world's largest pot company. In July, Canopy Growth's major backer Constellation Brands (NYSE:STZ) orchestrated a board room coup against the company's founder and CEO Bruce Linton, which sent the already beleaguered stock tumbling over 40% over the course of the summer. However, current management made an appearance at the Barclays 2019 Global Consumer Staples Conference on September 4 and offered some hope for investors.
Pedal to the Metal Strategy
Perhaps Constellation's biggest issue with Linton's leadership of the company was its weak profit margins, which have dropped by 20% in recent quarterly reports. However, new CFO Mike Lee, a Constellation veteran who assumed office in June, has argued that some of the declines in CGC stock could be attributed to investors not fully comprehending the company's strategy. The company decided to go “pedal to the metal” to reach production capacity straight out of the gates, which did lead to high overheads that Lee believes can be contained in “in the near future.”
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Legalization 2.0 and CGC Stock
Lee was also keen to emphasize the benefits that legalization 2.0 will have for CGC stock, of which a significant part of the company's strategy is focused on vaping. While Canopy Growth's competitors have been marketing vapes manufactured by third parties, it has invested significantly into in-house developments. "I can’t steal the thunder from announcements coming later this year, but we think that it’s going to be a very competitive portfolio of products that, yes, we think will grow the category."
Interim CEO Mark Zekulin was also on the media trail over the last few days, again reiterating the benefits legalization 2.0 could bring, telling BNN Bloomberg on Thursday that “there is a big prize at the end of this.” While CGC stock may be down slightly during Monday morning trading, it has still climbed 13% in the few days following this series of media appearances by senior executives at Canopy Growth and investors will be hoping that this is the beginning of a strong period of growth for the top pot stock.
Featured Image: Canva
