Canopy Growth Plays to Its Strengths for Future Growth What I do know is that Klein’s internal statements make it clear that rushing products to market just to be first is no longer acceptable to him, the board, and the rest of the executive management team.
The best means doing what’s necessary to make customers happy about the overall Canopy experience—not being first to market.
CGC Stock Depends on a Steady Hand
Last October, I argued that Constellation Brands (NYSE:STZ) was doubling down on its investment in Canopy, despite the fact it had sent co-founder Bruce Linton packing due to a lack of operational discipline.
I felt Cannabis 2.0 would be a defining moment for the company. Since then, it’s made an important acquisition, buying 72% of BioSteel Sports Nutrition, which got the company into the natural sports nutrition market, with an opportunity to deliver healthy CBD versions of BioSteel products.
While I felt there were a few external candidates worth considering to replace Linton, the board ultimately went with Klein, Constellation’s former CFO, who joined Canopy’s board in October before being promoted to CEO in December.
The fact remains that it was always Constellation’s intention to make Canopy the fourth leg of its revenue stool to complement its beer, wine, and spirits businesses. I never thought Constellation would run away from its commitment to Canopy.
On May 1, Constellation Brands exercised 18.9 million warrants, upping its ownership in Canopy to 38.6%. With the future exercise of the remaining 139.7 million warrants, Constellation would own 55.8% of the company.
“This additional investment validates the work our team has done since attracting the initial investment in 2017. It also strengthens our ability to pursue the immense market and product opportunities available to Canopy in Canada, the U.S. and other key global markets,” Klein said in its press release.
Bruce Linton was the perfect CEO to get the company up and running. Now, it needs a steadier hand to carry it from startup to industry leader. David Klein is better equipped to make this happen.
Playing to its strength is not only sensible from a financial perspective, but it also makes sense strategically. Being first to market is generally overrated.
Canopy shareholders ought to be happy about this.
https://www.msn.com/en-us/finance/companies/canopy-growth-plays-to-its-strengths-for-future-growth/ar-BB141Zdy