Cannabis stocks slammed as earnings disappoint
Major medicinal cannabis producers in Canada saw their respective stocks begin to slide last week after the market leader reported a disappointing set of earnings results.
The medical cannabis industry took a hit last week after the largest company in the sector in terms of market cap, Canada-based Canopy Growth, saw its share price decline after reporting lower-than-expected revenues in its first quarter (Q1) of 2020.
‘While strong harvest figures should allay crop failure worries, elsewhere we see little to reassure investors that significant [sustainable] sales growth and profitability will be visible in the near future,’ Jefferies analyst Ryan Tomkins said in a note.
Canopy Growth’s share price fell as much as 15% to CAD 36.11 in the wake of its Q1 earnings on Thursday last week. The stock closed 4.27% lower at CAD 35.66 on Monday.
Canopy Growth earnings miss mark
Despite generating net revenue of $90.5 million in Q1, it was well below analysts’ forecasts, with the company also falling short in terms of bottom-line estimates too, with Canopy Growth blaming its lacklustre performance on high expansion costs.
‘The company remains focused on laying the foundation for dominance in an emerging global opportunity,’ Canopy Growth CEO Mark Zekulin said. ‘This means investments in developing intellectual property, building brands, building international reach, and ensuring scaled production capability for current and future products.’
‘Second, we are fixated on the process of evolving from builders to operators over the remainder of this fiscal year, meaning that as our expansion program comes to a close in Canada, and as new value-add products come to market in Canada, we demonstrate a sustainable, high margin, profitable Canadian business,’ he added.
Cannabis rivals see similar stock declines
Canopy Growth’s disappointing performance has helped drag its peers’ stock lower too, with rivals Tilray, Chronos Group and Aurora Cannabis all down.
Since August 13, Tilray has seen its stock lose more than 30% of its value. Meanwhile, Chronos and Aurora have seen a 13% and 11% decline in their respective share price’s over the same period.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
