RE:RE:RE:RE:RE:RE:Risky???Vulcan wrote: Dont get me wrong it's good we are green.. but given the news I would have exspected deep red.. bankrupsy protection on bio ?? Does that not show an epic fail in managment.. in many ways... what other areas could be subject to failure. .. does the good news here outweigh the negatives .. any insite appreciated.. cheers
Hey V,
I can understand why it may sound confusing and as to why the SP went up on the news but I will try to draw some examples to put it in better context for you.
What Canopy has with BioSteel is essentially "another company" under it's overall Corporation. BioSteel operates as it's own Profit and Loss Center (in simplier terms "as it's own Company"). This means that BioSteel can go into bankruptcy protection and it has virtually nothing to do with Canopy Growth Corp (the parent company).
This is easier to think about if you look at monster-sized companies like General Electric. GE has everything from light bulbs to appliances and aircraft engines, medical companies etc (you name it and it's being made with a GE meatball on it). Anyhow, let's pretend that GE Appliances goes belly up because consumers all of a sudden realize their products are down right horrible and no one wants to buy them. In this scenario "GE Appliances" could go bankrupt but it will have minimual impact on GE Corp (assuming the cash flow was only a very small part of the larger parent company).
To compare Canopy to GE is not really fair (I realize) I did that to make the concept clearer. In regards to BioSteel and Canopy the market is likely favoring the fact that the financial strain that BioSteel brought to Canopy is now gone (the BioSteel cashflow was a net negative) and will no longer be showing up in the QTR reports. This doesn't mean that Canopy can't still sell BioSteel and take the financial benefit of doing so.
Essentially (in my view) its a bit of a win-win for the company as they stop the bleed but can still recover cash for the sale of the BioSteel operation (profit remaining after any debt settlements). Even if the sale of BioSteel is a wash / write-off the negative cash burn from BioSteel is now gone.
I sure hope that helped and didn't add to any confusion. I don't have the time I used to for posting to the forum these days.
As always, DYODD.
Best Regards
Q