The big news in the cannabis sector comes this Friday, when Canopy Growth (NYSE :), (TSX 🙂 is offering its third quarter for the 2020 fiscal year. That will of course only be true if there are no other surprise announcements of business disruptions.
Anyone interested in the cannabis industry will keep an eye on the Canopy figures. As the largest marijuana grower on earth, the results of the company can map out the prospects of the entire industry.
Sector under siege
Since the beginning of the year, the sector has been plagued by one announcement after another with a growing list of marijuana growers dealing with staff changes, layoffs, multi-million dollar write-offs and cash shortages: all those have lowered stock prices.
The good news is that analysts are still predicting decent results from Canopy. The Ontario grower is expected to show a year-on-year profit increase based on higher revenues.
No guarantee objectives are achieved
But just because the predictions are optimistic, this does not necessarily mean that achieving those expected goals is certain. If there is anything that we have learned in the cannabis industry, you cannot trust the hype and hope.
Canopy was recently forced to push the launch of many of its so-called 2.0 products – sheep, food and beverages – that became legal in Canada last fall in 2020. But the last quarter will include the start-up costs to put these products on the market. And since we are halfway through the month of February, we are aware of the additional legal and rollout obstacles that these products have affected.
In addition, Canopy tempered expectations last month by publicly admitting that it was unable to scale THC infused drinks. In its statement released on January 17, the company said it would provide an update on its beverage launch when it publishes its third quarter results. So pay attention to that.
The day on which Canopy announces its income will also mark a month since the new CEO took over the reins of the company. That kind of timing can mean the announcement of structural changes. And an announcement in that sense would not completely fall outside the field, given what we have seen in recent weeks from other large growers in the sector.
Weekly growth of the canopy
Canopy Growth Shares closed yesterday's session slightly less than 3% and ended the day at US $ 19.05 (C $ 25.38). In the past year they have fallen by more than 55%. TipRanks, however, still listed Canopy as a moderate purchase, with a target price of US $ 21.81.
Aurora continues to fall even further
Shares of Aurora Cannabis (NYSE :), (TSX 🙂 🙂 continued to fall yesterday and lost another 8% after a devastating week in which stock prices fell by more than 15%. The shares closed at US $ 1.56 in New York and C $ 2.08 on the S&P / TSX Composite in Toronto.
Aurora Cannabis Weekly Price Chart
The jump started last Thursday with the announcement that the CEO of the company resigned, that it would cut 500 jobs and that it would earn approximately C $ 1 billion (US $ 750 million) in value reductions – between $ 190 million ( US $ 143 million) to $ 225 million (US $ 169 million) in tangible fixed assets, $ 740 million (US $ 557 million) to $ 775 million (US $ 583 million) in goodwill.
Aurora stocks are now trading dangerously close to the lowest points ever. How the new CEO will navigate the company to better times is not clear. It is not clear at all.