It has been a mixed bag for marijuana producers this year. Although they enjoyed a strong start in 2019 due to the worldwide legalization efforts for marijuana and the growing use of CBD as a wellness product, the original euphoria – which sent shares of some producers – is now declining.
Investors have begun to assess these companies on their quarterly performance rather than on the longer term future. And it is unlikely that marijuana companies will make a profit soon. They also spend a lot on marketing to gain market share in this still emerging industry.
With this background, it is the sales that most analysts will focus on to see how successful cannabis companies have been in translating their stocks into hard cash. Two major pot producers, Canopy Growth (NYSE 🙂 and Tilray (NASDAQ :), are scheduled for their Q1 and Q2 earnings this week, respectively. Here's what to look for:
It is not an easy time for Canopy Growth, & # 39; the world's largest marijuana producer, to report its profit for the first quarter of the 2020 fiscal year on Wednesday, August 13 after closing.
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The Smiths Falls-based Ontario producer, whose stock closed $ 32.93 on Friday, has lost more than 30% of its value in the last three months, while the company is under increasing pressure to reduce losses and reduce spending. curb. After it was in June, the company's largest shareholder, Constellation Brands (NYSE :), forced the deduction of Canopy & # 39; s chairman and co-chief executive officer, Bruce Linton, on differences in strategy and spending decisions.
Constellation, which owns 38% of Canopy and manages the board of directors, wants management to focus more on operational efficiency after a major acquisition course. According to Dealogic, since Constellation's investment was announced in August 2018, Canopy has made $ 781 million in deals. Canopy also signed a deal in April that gave the company the right to purchase $ 3 for  Billion, depending on the American legalization of marijuana.
Investors may see a clear shift toward cost control and improving other earnings statistics when the company reports earnings, but it is still a long way to make a profit for this producer, which has the largest market share in Canada & # 39; s recently legalized recreational pot market. Analysts expect on average losses of – $ 0.22 per share with sales of nearly $ 86 million.
Tilray is scheduled to announce its fiscal 2019, second quarter profit after the market today, Tuesday August 12. The consensus forecast from analysts expects sales to double to more than $ 40 million, while with – $ 0.26 a stock loss.
In June, Tilary told investors that the cannabis company based in Nanaimo, British Columbia, will not generate positive income for at least another year, as it spends on the US CBD market and other opportunities. The American legalized hemp and hemp-derived CBD in December offers opportunities for Canadian producers south of the border. This development led Tilray to take over the manufacturer of hemp food Manitoba Harvest and to work with Authentic Brands Group LLC earlier this year.
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Tilray shares, which peaked at $ 300 in September last year, is one of the biggest boom-and-bust stories in the cannabis industry where the valuation of many stocks cannot be justified simply by looking at their sales numbers. When Tilray announces his income later today, that will be the main concern.
After a major jump since September, Tilray is still one of the most expensive stocks in the sector. It closed on Friday at $ 42.57, giving it a market capitalization of nearly $ 5 billion USD. That valuation can be examined if the company shows no significant improvement in sales.