Two of the biggest players in the cannabis sector will give a glimpse of how well the industry is doing later this week when they release their latest earnings figures.
Canopy Growth and Aurora Cannabis are two of the largest marijuana growers in North America.
One thing widely expected is that both cannabis giants will report declining revenues.
The first is Canopy Growth (NASDAQ:) (TSX:), which reports its third quarter results on February 9 before the opening bell.
According to a BNN Bloomberg report, RBC Capital Markets analyst Douglas Miehm said in a preview of earnings:
"We expect a focus on Canopy's strategy to stabilize its market share in the recreational segment and the company's progress in meeting the demand for higher THC products."
It reportedly has one of the largest cash reserves in the cannabis industry and has had a string of significant write-downs quarters. In addition, the company has seen its market share in the recreational segment slip in favor of rivals.
Given the loss of market share, Miehm wondered how the company could become profitable, as it would need to post quarterly revenue of approximately $250 million. Finally, revenue came in at $131 million.
Shares of Canopy Growth closed yesterday at US$7.85 on the NASDAQ in New York, stable for the day. This year, Canopy Growth has seen its share price drop nearly 10% so far. In Toronto, the stock closed at $9.93 yesterday, down less than 1% on the day.
Canopy Growth Weekly NASDAQ Chart.
Canopy Growth TSX Weekly Chart.
RBC Capital Markets lowered its price target for Canopy shares from $26 to $17.
Aurora Cannabis (NASDAQ:) (TSX:) follows on Feb. 10 with its Q2 post-close earnings report.
The company had previously announced it would be profitable by the end of the year, but some analysts are openly speculating on the likelihood of that happening. The company has said its cost-cutting measures will be reflected in upcoming earnings reports. We will see how far these measures will go.
Last week, the company announced that one of its US subsidiaries, Reliva, has launched a new line of CBD products aimed at adult consumers "with active lifestyles". The product line, which ranges from gummies to creams, is now available at convenience stores in the US.
Aurora shares closed at US$4.18 in New York yesterday, down just under three-quarters of a percentage point on the day, and about 29% so far this year. It closed at C$5.29 in Toronto, down about 1.5% on the day, and down about 25% so far in 2022.
Aurora Cannabis NASDAQ Weekly Chart.
Aurora Cannabis TSX Weekly Chart.
Legalized Pot Adds Billions to Economy's Tax Cash
Size Matters. According to a new report, Canada's cannabis industry has added C$43.5 billion to the country's economy after three years of legalization.
That's the headline of a report from Deloitte, which offered a comprehensive economic analysis of the impact of the fast-growing industry.
Since the legalization of cannabis in October 2018 through the end of 2021, the report claims that the economy has benefited from C$4.4 billion in direct investment by industry stakeholders, C$29.3 billion in what the report authors described as “indirect” economic contributions and C$9.8 billion in “induced” contributions.
According to media reports, the Deloitte report also calculated that the cannabis sector generated more than C$15 billion in direct and indirect tax revenues for both the federal and provincial governments.
