Employees work at the Canopy Growth facility in Smith Falls, Ontario, Canada, on December 19, 2017.
Chris Roussakis | Bloomberg | Getty Images
Canopy Growth shares rose on Tuesday after the Canadian cannabis company said it would be profitable by the second half of 2022.
“We are building a record of winning in our core markets, while also accelerating our US growth strategy with the momentum growing behind the promising cannabis reform in the US,” Canopy CEO David Klein said in a statement on Tuesday. said.
Canopy shares closed 11.9% on Tuesday at $ 49.09. The stock has risen about 149% over the past year, bringing its market value to more than $ 17.1 billion. In Tuesday’s trading, the stock rose to a 52-week high of $ 50.92.
The company previously reported third-quarter revenue up 23% from a year ago, to $ 153 million ($ 120 million), driven by higher sales of recreational products in Canada and medical cannabis on international markets.
Canopy’s loss increased to C $ 829 million (US $ 653 million), or C $ 2.43 per share, from a loss of C $ 109.6 million, or 26 cents per share, a year ago.
The company said it was trying to improve its profitability by saving costs and controlling expenses. These efforts, coupled with the expected increase in demand, should help him make a profit later next year.
Over the next 12 to 18 months, Canopy expects to reduce its costs by as much as C $ 200 million.
With the new Biden administration, Canopy Growth is optimistic about the prospects of legalizing cannabis in the US and says it expects to enter the market this year.
“We expect this legislation to include comprehensive reform to ensure restorative justice, protect public health and implement responsible taxes while ending the cannabis ban,” Klein said in a call.
According to Owen Bennett, an equities analyst at Jefferies Group, Canopy Growth continues to position itself as the leading cannabis company in the US for short-term law reform, after acquiring ownership in Acreage and a stake in TerraAscend.
Bennett also cites its Martha Stewart CBD line, which outsources 94% of all U.S. CBD brands four months after launch, as another factor. The brand recently added CBD pet products.
Canopy Growth has reached its medium-term financial targets and estimates that the composite annual income will increase by between 40% and 50% between the 2022 and 2024 financial years. In addition, the company expects to achieve a positive operating cash flow in the 2023 financial year and a positive free cash flow for the 2024 financial year.