CURRENT REALITIESin this fast moving world we live in right now, there are multiple realities that are going to severely impact this stock. Off the top of my head, and in no particular order.
1) Wtih Powel signalling that he is going to speed up the taper, the market bull is now dead imho. Ultimately, removing the taper would kill the bull anyway, but basically announcing that speeding up the process is death to the market.
2) Covid is no longer seen by the Fed as a demand stopper. It's a supply stopper, hence the inflation, and hence the speeding up of the taper. People used to think that Coivd meant more goverment support and more handlouts. The thinking has clearly changed. Covid now means taper faster.
3) The market as a whole has had a run that is completely overdone. It's a bubble pure and simple. Well welcome to the earliest signs of the bubble bursting. Unfortunately, there is a lot of new/fast/uneducated money in the market, and a lot of money in market instruments/funds/etfs, that just didn't exist the last time any bubbles burst (2008 and the dot com bubble) What I fear is that there is going to be a flood of redemptions that is going to force-crush the market, which will then lead to further redemptions, and this will cycle on itself ramping up more and more. It's a VERY ugly scenario.
4) Governments are now broke having tried to save the world from Covid. They can't afford more, and I don't think the help will be there going forward that was there in March 2020. This will crush economies around the world, bringing up the possibilites of recession as people hunker down.
5) Interest reates will need o rise to tame inflation. But doing this is a double-edged sword. Governments can't afford higher rates (U.S. the worst of the bunch) and people will only hunker down further, putting a further chill in the market.
6) For Canopy, it will be a relentless headwind. They are in a very tough spot now, certainly not capable of bracing against a downside market gale-force wind that will go on for some time.
7) I'll say it again, but legalization is NOT going to happen for years in the U.S. It was a decent bet by Canopy at the time, but it is now coming back to bite them hard. They are overcommiteed and overspent, with no place to go.
8) The burn rate of the company remains completely unsustainable. Poducts people don't want. High level multiple firings, and no hope of retooling with new products for at least 6 months. And even then, they have the stigma of "crappy products" to now overcome in the market.
9) The market continues to evolve. 2.0 products, in particular edibles, are ramping up strongly, but these are not high margin products at all. Cue lower profits. Beverages have been a bust for the most part, and a lot of money spent there too. It seemed like a good idea at the time, and I fully supported it myself. Unfortunately, it's mostly a fail, or at best, a one-time curiosity/novelty by the consuming public.
With the change in the market, and the growing reality that Covid is going to be a problem for some time to come, I seriously question whether Canopy can survive. Either way, I think it's going to be REALLY ugly going forward for the company and the stock. The bottom, if there even is one, is much lower still.
All considered, I think holding the stock is a very risky proposition. There just isn't anything I can see that shows any good reason to hold the stock, at any level. Being in the market is always a risk/reward equation. At almost every turn here on Canopy, the risk equation far far FAR exceeds the reward. Simply put, there are other safer AND faster ways to make money in the market.
We'll see what comes, but my doubts are even stronger regarding t the ultimate survivability of the company. Imho, that potential is dimming by the day.