CGC stock is up a whopping 61% so far in 2019 on the NYSE, making it one of the best-performing stocks in the cannabis industry. Moreover, shares of Canopy Growth Corp (TSX:WEED) (NYSE:CGC) are up 2000% in the past three years.
With a valuation of over $14 billion USD, and gradually increasing revenue, Canopy Growth has been showing negative Earnings per Share (EPS). So why is that?
Revenue Growth: A Key Driver
Unlike other fast-growing industries, companies operating in the cannabis space have to wait much longer to break even, and Canopy Growth is no exception. Even after posting remarkable financials for the Q4 2018, EPS is still negative. Canopy Growth has even projected that the negative trend in EPS will persist to 2020.
This is not to mean that the company is struggling in the stock market. In fact, in 2019 alone, CGC stock has gained 61% and about 2000% in three years. Canopy Growth has received a fair amount of positive press, which likely explains its successful run on the stock market so far.
Cannabis legalization in Canada was met with an acute supply shortage, and for the past months, industry stakeholders have been racing to meet the deficit. Canopy Growth together with a few other industry leaders is a step ahead, having received a license to begin growing cannabis at its Fredericton facility.
US Market is the Bigger Price
With its leading position in the Canadian market defended, Canopy Growth has its eyes set on the US market expected to be open soon. Analysts project that the United States cannabis market will tower that of Canada’s. Canopy Growth has already set its footprints in the US by acquiring intellectual property of the Colorado-based Ebbu Inc. The company also received a huge investment of $4 billion USD from Constellation Brands (NYSE:STZ) to power its expansion plans.
What do you think about CGC stock?
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