This week has been a big one for the marijuana industry, as some of the biggest companies in the budding sector have given their latest reports about their financial condition. Many investors have looked to Canopy Growth (NYSE:CGC) as the bellwether in the cannabis space, especially given the huge commitment that beer and spirits giant Constellation Brands (NYSE:STZ) has made to the company.
Coming into Wednesday’s fiscal second-quarter financial report, Canopy investors expected that the company would be able to keep up with its cannabis-producing rivals. Some of Canopy’s numbers…
disappointed its shareholders, but the company put itself in position during the past few months to meet its supply commitments as October’s legalization of recreational cannabis in Canada loomed. That will prove far more important to the long-term success of the company, even if investors can’t get past the immediate letdown of seeing financial metrics fall short of their hopes.
Canopy’s revenue rise falls short
Canopy Growth’s fiscal second-quarter results were in line with what the company had expected, even if they weren’t entirely satisfying to others. Revenue of 23.3 million Canadian dollars was higher by 33% from year-ago levels, but that was well below the near-tripling that some of those following the stock were expecting to see on the top line. Canopy reported a loss of CA$330.6 million, working out to CA$1.52 per share, which was far worse than the consensus forecast among investors for CA$0.08 per share in red ink.
Canopy’s financial performance was a natural result of its overall strategy. The cannabis company made only small test shipments of products into recreational channels during the quarter, ensuring that supply chain logistics would work correctly going into mid-October’s Canadian launch but avoiding larger pre-sales. That should make the current quarter’s performance look even more impressive, showing the true growth from the rollout.
Fundamentally, Canopy’s numbers were mixed. The company reported a 34% rise in active registered patients using medical marijuana, hitting 84,400 for the period. Sales volume of cannabis rose only slightly, with a 9% gain to 2,197 kilogram equivalents. However, Canopy stocked up…
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