SMITH FALLS, Ont. — Canopy Growth Corp.’s share price hit a 2019 low Thursday after the Canadian cannabis producer posted a $374.6-million quarterly loss, missed analyst revenue estimates and warned that a key revenue target may not be achieved.
Canopy stock hit an intra-day low of $20.15 at the Toronto Stock Exchange during the morning, and continued to trade down about 16 per cent from the previous close later in the morning.
Earlier, the company announced that second-quarter net revenue totalled $76.6 million, which was down 15 per cent from the prior quarter and below an average estimate of $107 million compiled by financial markets data firm Refinitiv.
Interim chief executive Mark Zekulin also told analysts during a conference call that his previous projection of $250 million in revenue for the company’s fourth quarter, ending in March, “is increasingly unlikely.”
While Zekulin insisted that Canopy has the resources to take advantage of the long-term potential for legal products derived from cannabis and hemp, he also said Canada’s market opportunity “is simply not living up to expectations.”
“At the risk of oversimplifying, the inability of the Ontario government to license retail stores, right off the bat, has resulted in half of the expected market in Canada simply not existing,” Zekulin said.
He added that the company is pleased to see Ontario’s recently announced commitment to move towards an open allocation of retail licenses where the number of stores will only be limited by market demand.
“This is a big deal but it cannot come soon enough.”
The cannabis producer says the loss amounted to $1.08 per share for the quarter ended Sept. 30 compared with a loss of $330.6 million or $1.52 per share a year ago when it had fewer shares outstanding.
That compared with $23.3 million in the same quarter last year before the legalization of recreational cannabis in Canada, but down from $90.5 million in its first quarter.
The company says the second-quarter results included a restructuring charge of $32.7 million for returns, return provisions, and pricing allowances primarily related to changes to its softgel and oil portfolio.
Canopy also took a $15.9-million inventory charge related to the change in strategy which includes new retail pricing, a rationalized package assortment and a focused marketing and educational plan.
This report by The Canadian Press was first published Nov. 14, 2019.
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