what happened
Marijuana stocks are rising today. Tuesday at 11:25 AM EST Roof growth (NASDAQ: CGC) increased by 10.1%, and the marijuana competitors Aurora Cannabis (NYSE: ACB) and HEXO (NYSE: HEXO) performed even better, by 11.4%.
And the reason all these stocks are doing well is Canopy itself.
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Approximately
This morning, Canopy Growth announced its earnings for the fiscal third quarter of 2021, with a record revenue of 153 million Canadian dollars ($ 120 million), which is 23% higher than a year-on-year, and predicts that it in the second half began to convert into profit in profit. of fiscal 2022. If Canopy’s somewhat accelerated financial calendar completes, it implies that the company is only a year away from profitability. Canopy says it sees potential for cannabis reform in the United States that will help it achieve this goal.
The promise of profit over a year is implied the recognition that Canopy Growth is not yet profitable today. The company’s gross profit margins fell by 15 full percentage points in the third quarter of 2021, compared to the previous year, to just 16%. Net losses increased by more than 600%, to $ 829 million.
And Canopy spent $ 135 million in negative free cash flow.
Now what
Despite all the negative numbers, Canopy Growth has expressed optimism about the medium-term future. The company predicted that, with the opening of the US market, it will accelerate its revenue growth from the rate of 23% introduced in the third quarter, to 40% to 50% growth rates from fiscal 2022 to fiscal 2024.
The company also predicted that it will achieve positive adjusted EBITDA in the fiscal second half of 2022, positive operating cash flow towards the end of fiscal 2023 and positive free cash flow in fiscal 2024.
All of this news is specific to Canopy, and the qualified promise of profitability within a year does not mean that Aurora Cannabis and HEXO will be profitable either. That said, Canopy set the scene for Aurora’s own earnings report, which would come in the next few days, and HEXO’s report, which was likely to appear in late March.
Investors offering these stocks today will hope that the news they have to report will be at least as good as Canopy just reported – and hopefully even better.