MW Canopy Growth's mixed results stop momentum from recent marijuana-stock rally

By Steve Gelsi

Canadian pot company posts another quarterly loss as adult-use sales slump, despite some bright spots

Canopy Growth Corp.'s stock fell sharply in premarket trading as the Canadian pot company's wider-than-expected third-quarter loss chilled a recent rally in its share price.

While Canopy Growth $(CGC.AU)$ managed to reduce its losses and pay down debt, its operating margins fell as it invested in a new product launch. It also faced weaker adult-use sales, although its medical-pot business grew.

Canopy Growth's stock fell 15% in premarket trading, after rising nearly 40% in the past week.

Canopy Growth said its third-quarter loss narrowed to C$121.9 million ($85 million), or C$1.11 a share, from a loss of C$216.8 million or C$2.62 a share, in the year-ago period.

Analysts had expected Canopy Growth to post a narrower loss of 52 cents a share.

Revenue fell 5% to C$74.76 million, ahead of the FactSet consensus estimate of C$69.1 million.

Adult-use sales fell 10% to C$21.2 million, while medical-cannabis sales jumped 16% to C$19.6 million.

Third-quarter gross margin fell by 4% to 32% from the year-ago level. Canopy Growth cited incremental costs related to the launch of its Claybourne-infused pre-rolls, as well as higher indirect costs at its Storz & Bickel vaporizer unit.

Canopy Growth also reduced its third-quarter debt to C$442 million from the previous quarter's debt of $C554 million by making an early prepayment on its senior secured term loan.

Fresh speculation about U.S. federal reforms for pot, as well as a rally in fellow Canadian pot company Aurora Cannabis Inc. $(ACB)$ (CA:ACB) fed gains in cannabis stocks earlier this week

Also read: Cannabis stocks extend gains on RFK Jr. committee vote, Senate banking comments

-Steve Gelsi

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February 07, 2025 08:15 ET (13:15 GMT)

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