Share price of Canopy Growth and Tilray each fall 6.5 percent in same week quarterly results released

The weed industry has been dogged by a lack of public enthusiasm for cannabis beverages and regulators’ unwillingness to embrace CBD

Tilray-nasdaq

Tilray shareholders had high hopes for the company when it went public on NASDAQ in 2018. Photo by Tilray

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While high flyers like Tesla and Amazon are making their investors oodles of money, the same can’t be said of Canadian weed companies. In a week when two of the big players—Canopy Growth Corp. and Tilray—released quarterly results, their share price lagged.

Canopy Growth stock fell 6.5 percent over five days to close the week at $22.82 in Toronto. This occurred despite the Smith Falls–based company reporting net revenue of $110.4 million from April to June. That compared to $90.5 million over the same three-month period last year.

However, the gross margin was 64.5 percent lower in the recent quarter. The quarterly net loss of $128.3 million was significantly lower than the $194.1-million loss in the same quarter last year.

Canopy Growth Corporation had $975.9 million in cash and cash equivalents at the end of the quarter, compared to $1.82 billion at the same time last year.

“Following our previously announced restructuring actions, we have substantially reduced our expense and cash burn in this quarter in addition to reducing headcount by over 18 percent since beginning of this calendar year,” Canopy Growth chief financial officer Mike Lee said in a company news release

“Our marketing and R&D investments are being re-allocated to programs with high-return potential in order to drive sales.”

In other cannabis news, Tilray’s share price also fell 6.5 percent this week, closing on Friday at US$7.25 on NASDAQ. On August 10, it reported US$50.4 million in revenue over the three months ending June 30. That marked a 9.8 percent increase over the same period in 2019.

However, the quarterly net loss jumped 125 percent to US$81,687 in the recent quarter.

Share price hurt by three trends

Tulalip, Washington–based financial writer Sean Williams delivered the most devastating analysis this week of what’s gone wrong with pot stocks.

Writing on the Motley Fool site on August 12, he listed three cannabis trends that, in his words, have fizzled out: infused beverages, vapes, and CBD. The latter was trounced by the U.S. Food and Drug Administration.

Back in 2018, Tilray had high hopes for its high-CBD extract.

Canopy’s largest shareholder, Constellation Brands, invested in the weed business with hopes of making millions from cannabis-infused drinks.

They’re not the only ones who’ve felt the impact of these trends.

“Without being able to add hemp-derived CBD to food and beverages, a significant chunk of the CBD market has been put on the shelf for the time being, which is why companies like Charlotte’s Web Holdings have been clobbered,” Williams wrote.

Speaking of Charlotte’s Web Holdings, its investors had a pretty good day on Friday. That’s because the share price rose 7.36 percent to close at $4.96 in Toronto. However, the stock is still down 49.2 percent from the start of the year.

Williams also mentioned Toronto-based Cronos Group in his article. Its share price fell 2.6 percent this week to end the week at $7.49 on the TSX.

Meanwhile, Leamington-based Aphria’s shares fell 3.1 percent on the week to close at $5.98 oin Toronto. And Delta-based Village Farms International shares declined 6.6 percent to close at &.66 in Toronto.

There were winners on the week

After going through a rough period, Organigram Holdings shareholders can reflect back on a positive week. The stock rose 14.2 percent over five days, closing at $1.93.

This came after some serious cost-cutting measures.

Investors in Ottawa-based Hexo Corp. enjoyed an 11 percent share-price rise this week. The stock closed at US$0.79 in New York on Friday.

Shareholders in Edmonton-based Aurora Cannabis saw their stock rise one percent on the week to close at $14.07 in Toronto.

And Massachusetts-based Curaleaf Holdings—the largest cannabis public company by revenue—continued riding high. Its shares went up by 2.2 percent over the week, closing at $11.96 on the Canadian Securities Exchange.

Curaleaf’s market cap stands at $5.25 billion, which is still far short of Canopy Growth’s industry-leading $8.47 billion.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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