Can Canopy’s Q2 Earnings Transform the Fortunes of CGC Stock?

CGC Stock

Under the leadership of pot pioneer Bruce Linton, CGC stock was at the forefront of the cannabis industry less than a year ago. Fast forward a few months, and Linton is gone, and with him went over 60% of the company’s share value. After reporting a quarterly loss of $1.28 billion CAD back in August, can Canopy Growth’s (TSX:WEED) (NYSE:CGC) fiscal 2020 Q2 earning provide some salvation for investors?

What are Analysts Expecting?

Canopy Growth is set to report its fiscal 2020 second-quarter results on November 14, and those results will be some of the most eagerly anticipated in the industry. The consensus expectation is that Canopy will report revenue of $112.86 million CAD, which would be a massive increase of 383% from the same period last year, although that was the company’s last earnings call before cannabis was legalized. Revenue of $547 million CAD could fall well short of the previously predicted figure of $1 billion CAD, which could have disastrous consequences for CGC stock.

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2.0 Products to Drive Growth in CGC Stock?

While Canopy’s earnings may not be enough to change the fortunes of CGC stock, its 2.0 market portfolio could come to the rescue. With 32 products set to launch before December and 20 more next year, it’s fully prepared to capitalize on the newly legalized product categories. Cannabis derivatives, such as edibles and vapes, have a much higher margin than sales of cannabis flower, and could potentially even up Canopy Growth’s books in the second year of legal pot.

Potential revenues from the new cannabis products and bringing in new consumers who previously would not have been interested in cannabis products are two key factors in transforming the fortunes of the market. Canopy’s extensive range of vapes, edibles, and infused beverages, manufactured in conjunction with its parent company and alcohol giant Constellation Brands (NYSE:STZ) excellently position the company, and CGC stock, to take advantage of an expected three million new consumers in the 2.0 market.

CGC stock is currently trading at $20.18 on the New York Stock Exchange, and speculators will be expecting some interesting movement in the lead up to next week’s earnings call.

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