Canopy Growth Corp T.WEED

chefboy and homeboy say canopy is a buy

[charliebitmyfin]

3 Glaring Red Flags Canopy Growth Investors Can't Afford to Ignore

 

Motley Fool - Wed Nov 23, 7:35AM CST

 

Cannabis producer Canopy Growth (NASDAQ: CGC) has been focused on the U.S. market for multiple years now. In 2019, it announced plans to acquire Acreage Holdings, and since then, it has made similar deals with other companies.

But promises of long-term growth are nothing new for the cannabis industry. Investors interested in the industry need to be careful about getting caught up in the hype. And when it comes to Canopy Growth, there are some serious red flags investors should consider before taking a chance on the stock.

1. The company's focus on the U.S. market could be risky and costly

 

Canopy Growth has been expending resources on expansion into the U.S., but there's one huge problem: They can't operate in the market just yet. And while the launch of Canopy USA (where it will consolidate its U.S. investments) may have you convinced it's inevitable, in reality, it could still take many years for regulation to take place (assuming it does at all). Canopy Growth's aggressive plans to consolidate results from Canopy USA could also risk the company getting delisted from the Nasdaq.

Setting up Canopy USA is just one example of how the company spent resources where it may not have made plenty of sense to do so. Although it's not explicitly stated how much, the company is incurring costs on something that may not be all that beneficial for the business right now. Its wretched bottom line -- which was at a net loss of 231.9 million Canadian dollars in the second quarter (period ended Sept. 30) -- or nonexistent sales growth are areas that should be higher priorities right now.

2. Sales are disastrous in Canada

 

The company's net revenue for Q2 was CA$117.9 million and declined 10% year over year. But some of the worst numbers came from the Canadian market, where Canopy Growth's recreational sales crashed 35% to CA$38.1 million. Its business-to-business sales declined by 40%, while revenue from the business-to-consumer market fell by 23%.

Investors may be surprised to learn that two years ago, Canopy Growth's revenue from the Canadian recreational market totaled CA$60.9 million; it has declined by an incredible 37% over that time. Although Canopy Growth is looking to focus more on the U.S. market, by not growing and achieving strong results in Canada, it isn't putting itself in a good position for success if and when the opportunity to enter the U.S. market arises.

3. Its cash burn is worsening

 

To make matters worse, Canopy Growth is also burning through increasingly more cash. The cannabis company reported a free cash outflow of CA$135.4 million during Q2, which was 34% more than the amount it used in the prior-year period. The company does have more than CA$1.1 billion in cash and short-term investments that can help absorb the cash burn, but it's not sustainable in the long run.

Why I'd avoid Canopy Growth stock

Investors may be tempted to invest in Canopy Growth in the hopes that it will be a big winner when the U.S. legalizes marijuana, but that's by no means a sure thing. For the company to be in a good position to enter the U.S. and grow its business, it needs strong financials -- something it doesn't have today.

And investors also need to prepare for the worst-case scenario: that legalization doesn't take place for years. Its core Canadian operations don't look great, and with deep losses, plenty of cash burn, and sales dropping significantly, the business simply doesn't make for a good investment today.

[Ventura2020]

The name says it all "Fools" absolute garbage on a daily bases. Anyone that follows, reads or takes their advise is a "Fool"

[Chefboy69]

100% agree anyone that takes Motley Fools advice deserves to lose money AND anyone that listens to charliebitmyfin and Rotaluceps( who i think are the same, but could be wrong) deserves to lose money They are obvious SHORTS here

[TheGrapeOne]

Odd Canopy is moved to a buy and the trolls want ignore and spread FUD and fear and hope that maybe just maybe a few retail investors may sell 300 shares. The reality is daily 12 milion shares are bought and sold the retail investor is not affecting the price the people who are affecting the the stock price would laugh at the lame attempts by the trolls on here. Market is future looking and the

[Dude51]

1) What ever Trump Terd, the key word is "Could". Well that gives me a 50/50 chance. imo So I'll take the risk. Thanks Motely. You should charge for that advise. Charlie bumm fucc may get a subscription. 2) Ehhh, still made a 135 million last quarter, achoo, nothing, to sneeze at, just saying. 3) Gotta spend money to make money, just the way it is. Try going back to school, get

[geodcan]

Reasonable write with a whole lot of truth in it.  For myself, I am a big picture guy and their US intentions have been the focus all along imho.   Canadian pot is a failure by design and very costly to our homegrown companies that are doing business in Canada, Thank You government! I'm not willing to write Canopy off because they have hardcore businesspeople calling the shots