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Tuesday, July 5, 2022

Canopy Growth Doesn’t Grow

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Canadian cannabis The company reported a fourth-quarter loss of C$578 million, culminating in a C$4.1 billion loss since 2015. Compared to the previous quarter, revenue collapsed. Net sales fell 21% to C$111.8 million.

In general, Canada entertainment Cannabis sales fell 19%, or C$39 million.

Compared to the previous quarter

Compared to the previous quarter, the canopy growth is not growing. The company’s sales fell in sales of flowers and oil. but drinks, eater The vapes remain unchanged. Canopy reported a 25% decline in revenue in the fourth quarter compared to the same period last year.

Some critics blame his board for being above their heads. For example, during an earnings call, David Klein, CEO of Canopy, recommended one of their cannabis drinks for Memorial Day long weekend. Of course, you cannot buy cannabis drinks from Canopy in the United States. Canada does not celebrate Memorial Day. Canada celebrated Victoria Day, or “the second or fourth of May,” the previous weekend.

Another prime example of why Trudeau legislation The market should have opened to BC Bud instead of corporate lawsuits. BC Bud growers not only know how to grow high-quality cannabis at a profit, but many of them are also actually Canadian.

Despite Canopy’s struggles, Klein remains Canada’s highest-paid CEO, with $45 million. With a salary of over $280,000, a large portion of his compensation comes from stock options.

Canopy growth does not grow stock

Given Klein’s compensation in stock options, Canopy’s recent earnings should sound the alarm. On the Nasdaq, Canopy finished at $4.88 a share ahead of Memorial Day weekend. This represents a 12% decrease.

Canopy growth does not grow north of the border either. At TSX, they closed at C$6.18 on Friday. Then they lost another percentage at the TSX open on Monday.

Canopy Growth saw its revenue decline 35% compared to last year. Net revenue wasn’t impressive either, with a total loss of C$111.8 million (US$87.6 million).

Investors have pressed the sell button as this is well below analyst expectations.

CEO wants to remain ‘Asset-Light’

A common criticism of Canada LPs They were not selling cannabis, they were selling stocks. Since Klein took over as CEO, he has preferred the “asset-light” approach.

This is at least the reason why Canopy wants to buy 75% of the shares of California-based cannabis company Jetty Extracts. The deal will only be executed when the United States legalizes cannabis federally.

As Klein told shareholders, “I firmly believe in the strength and competitive position of the United States THC The ecosystem we are building. Canopy’s unique model is poised for rapid growth and focus on priority markets with fast-growing categories, strong brands and a balanced operations footprint. ”

Klein defended the lack of canopy growth this past quarter. He said Canopy did not include sales of Wana Brands in the company’s financial statements. And I’m number one eater The brand is in North America, but their relationship with Canopy, like that of Jetty Extracts, is not a done deal.

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