CGC stock is leading the cannabis sector sharply lower in Thursday's session after Canopy Growth (TSX:WEED) (NYSE:CGC) reported a higher loss for the first quarter.
Canopy Growth has reported its first-quarter results for fiscal 2020, which show that the company missed on revenue despite showing strong growth in major operational metrics.
Q1 Revenue Missed Analyst Estimates
In the first quarter, the company reported gross revenue of more than $103 million CAD, which nearly quadrupled what the company generated in the same quarter a year ago when it posted revenue of $25.9 million CAD. However, this fell short of average analyst projections, who were expecting gross revenue of more than $109 million CAD and a net loss per share of $0.38 CAD. Net loss deepened from a shortfall of $91,000 CAD in the first quarter of 2019 to around $1.28 million CAD in Q1 2020.
The company increased its cannabis harvest from 9,685 kilos a year ago to around 40,960 kilos in the quarter. Most of the company’s significant top-line growth resulted from the sale of recreational marijuana following its legalization by the Canadian authorities in October. Canopy Growth generated $61 million CAD from recreational cannabis, which accounts for close to 60% of the total revenue in the quarter. On a sequential-quarter basis, gross revenue rose by 8% in Q1 2020 compared to Q4 2019.
CGC stock took an 8% dive following the release of the unconvincing quarterly results.
Canopy Targeting International Markets
Canopy Growth continues to perform well in international markets that it supplies medical cannabis. It generated $10.5 million CAD from the international markets, which was almost triple the $3.4 million CAD reported in Q1 2019. The company is looking for international markets for expansion, especially in Europe because of the relatively high level of acceptance of cannabis and cannabis products as well as relaxed laws in the region.
Operating expenses increased substantially by 73% to over $229 million CAD, which is attributed to the growing number of employees in retail stores, investments in branding, and marketing campaigns targeting future developments like the “second wave” of adult-use legalization in Canada.
So far this year, CGC stock is up 5% and down 40% from its January's peak price of $51.
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