Shares of Canopy Growth (NASDAQ 🙂 (TSX 🙂 surged in pre-market activity this morning after the cannabis heavyweight unveiled its latest quarterly report this morning, falling slightly in the minutes following the opening bubble.
The cannabis company reported C $ 148 million (US $ 123 million) in revenues for the fourth quarter, which ended March 31. That figure is up an impressive 38%, and only slightly below analyst expectations of C $ 151 million (US $ 125 million) – C $ 153 million (US $ 127 million).
The Canadian grower also reported an adjusted EBITDA loss of C $ 94 million (US $ 78 million). In a statement, the company said it is on track to achieve positive adjusted EBITDA in the second half of 2022.
The company, which markets a wide variety of cannabis-infused beverages, gummies and chocolates, as well as dried flowers, has cut operating costs by 25% over the past three months, stating that its cost-cutting program is predicted to C $ 150 million (US $ 125 million) to C $ 200 million (US $ 166 million) in savings over the next year.
Over the past 12 months, Canopy Growth shares are up about 50%. They closed on the NASDAQ last Friday for $ 26.09. The American market was closed Monday for the Memorial Day holiday. In Toronto, Canopy closed at C $ 32.25 yesterday. In the past year, the Canadian-traded Canopy share is up about 25%.
Hexo on his way to the top of Canadian cannabis pack
Deals in the cannabis industry are increasing – both in pace and size. Earlier this spring, Tilray (NASDAQ 🙂 merged with Aphria (NASDAQ 🙂 to create the largest marijuana company in the world, which still trades under the Tilray name. And now another Canada-based cannabis grower is looking to expand, expand its reach and potentially challenge Tilray for his title.
Late last week, Hexo Corp (NYSE 🙂 (TSX 🙂 announced that it was acquiring Redecan Pharm, a privately held Canadian cannabis company, for nearly C $ 1 billion (US $ 830 million). Not only is the deal a major acquisition, but it signals an official trend among Canadian cannabis companies vying for market share.
When the deal is completed, the C $ 940 million (US $ 780 million) cash-and-stock deal will ensure that Redecan's shareholders will acquire a 31% stake in the expanded Hexo. The purchase has yet to be approved by regulatory authorities and get the green light from Hexo shareholders. While no date has been announced when all of this could take place, Hexo officials said the deal could be finalized by the third quarter of this year.
What does this deal mean for Hexo?
The size of the expansion has everything to do with where Hexo is placed. The company can now look beyond its plan to be among the top three cannabis companies in Canada to potentially jump straight to the top spot – with the largest share of the adult recreational market. But Hexo & # 39; s ambitions extend beyond North America.
Earlier this year, Hexo announced that it was purchasing Zenabis Global (OTC :), a European-based cannabis grower, for C $ 235 million (US $ 195 million). This move increases Hexo's footprint in the European medical marijuana market.
In May, Hexo continued to buy spree and purchased 48North Cannabis (OTC :), a small grower traded in Canada and the US, for $ 50 million.
All things considered, these deals could put Hexo at the top of the rankings in terms of being the leading Canadian cannabis company – ahead of Tilray and Canopy Growth.
On the news of Hexo & # 39; s expansion plans, US stock trading rose nearly 10% last Friday, closing at $ 7.18. They are still trading below the high they hit in early May of around US $ 7.40. In the past year, Hexo stock has gained an impressive 183.6%.
