HITTING THE BRICK WALLOk, there is now EVERY reason to get OUT of this stock. Hear me out while I explain to you what is happening.
1) As I've noted before, Canopy is burning through cash at a COMPLETELY unsustainable rate. At the current burn, they will be completely bankrupt in 3 more quarters.
2) Please note: You HAVE to get your head around the difference between what you think is a good company, and the company's ability to stay afloat. There are endless examples of "good" companies that simply ran out of cash. Absolutely, you can have both scenarios simultaneously. Newbies often think "well if they're a good company, they just will survive". Ummm, think again. It happens ALL the time
3) So Canopy is in a really desperate spot right now. They HAVE to raise cash. They can do this through sales (won't happen in the next 3 quarters), or they can do it through new opportunities. The only opportunity that Canopy had, and it was the ultimate Hail Mary pass, was U.S. legalization. Well it might happen some day...some year....but it DEFINITELY is NOT going to happen in the next 3 quarters. So Canopy has a MASSIVE problem in that they have to raise cash, and the only way to do it is to go to the market with another share offering. It is their ONLY option.
4) Well that "only option" is an ugly scenario. Because the share price is in the toilet, so they're going to have to put out even more shares, which equals even more dillution, at a really lousy price. This will kill the share price because when companies raise money when they're in financial trouble, the compay has to do the offering at a substantally lower price than the current price...just to make it attractive. Now, in GOOD times, with GOOD share offerings, it's still always offered at a discount. But this is not a "good time" scenario. This is a "hitting the brick wall scneario". So the discount is going to be devastating to current shareholders...not to mention the sheer size of the dillution.
But wait...it gets worse.
5) This scenario is a shorter's dream. And there are signs that this dream is now actively in play.
a) Shorts know the offering is the only solution, and it will have to be at a significant discount.
b) So shorts start shorting the stock, because they buy the offering (at a massive discount), and then automatically have the shares to cover their short without having to go to the open market to buy back. ITS A GUARANTEED WIN FOR THEM.
c) So that's what you're seeing. The short volume is spiking because they can short with no worries at all.
d) But while they're shorting the Hell out of the stock, guess what happens to the share price? Well, obviously, it goes down even further, making the offering at an even lower level, making their short an even bigger win. They can play this game alllllll day long, day after day, because they can't lose.
e) And as this game gets played out, it puts pressure on the company to do the offering sooner than later, so the share price doesn't get slammed even further by the short game. This is why I say that this offering will be imminent, and people should get the Hell out of the way of what will be a total mess.
People need to stop cheerleading here and see what is taking place in the market. The company is essentially being strangled by the short effort, and the shorts have nothing to fear. It's the market folks. NOT a pretty place, and in this case ,it has NOTHING to do with whether you think Canopy is ultimately a good company or not.
Remember I said numerous times "we're here to make money"?? Well the short effort certainly knows it, and they're going to play the game ruthlessly. They don't care about your hopes and dreams. They don't care about the company. It's just an opportunity in the market that they're exploiting. And please, don't go off ranting that this is so unfair, blah blah blah. Again, this is the market. THE dirtiest sandbox on the planet.
Now, think people, because you're about to get slaughtered.