Canopy Growth stocks are falling
Meanwhile, the industry is growing

Canopy Growth Corp. fell sharply to its lowest level since early 2020 on Friday after the cannabis company said it expected slower-than-expected sales growth in the second half of fiscal 2022.
Canopy Growth CGC, -11.09% WEED.WT, -14.29% cut its quarterly loss, but it said it continues to face strong competition in the Canadian market and made cautious comments about the launch of its US BioSteel sports drinks brand.
"Our gross margins have suffered from lower than planned volume, continued price pressures in value and inventory write-downs resulting from our underperformance in the Canadian market," the company said on its quarterly conference call with analysts.
Canopy Growths' shares fell 10.8% to below $ 12 a share.
See also: New York's new cannabis boss swears half of its legal licenses will go towards social justice efforts.
The company announced that its second quarter loss decreased to C $ 11.06 million ($ 8.8 million), or 3 cents per share, from C $ 32.06 million, or 9 cents per share in the same period of the previous year. Revenue fell to C $ 145.6 million from C $ 150.8 million.
According to FactSet estimates, the cannabis company, which is controlled by Constellation Brands Inc. STZ, + 1.52%, had expected a loss of 20 cents per share on sales of C $ 139.50.
"The company is focused on stabilizing its Canadian recreational cannabis market share," said Canopy Growth. "The company is taking steps to improve its Canadian recreational business, with increased supply of high-THC flower products in demand and new product launches in the areas of flowers, pre-roll joints, vapes, edibles and beverages to increase market share."
On the US side of its business, Canopy Growth said it expedited the expansion of BioSteel's sales in the second half of 2022, but added that "shipments may depend on the timing of chain approvals and associated shelf reserves."
MKM Partners analyst Bill Kirk said the results were worse than feared.
"We still like the potential of the US business (even before THC activity), but we are shocked by the cost issues over the period and the development of Canada's market share," he said. "The battle for Canadian market share is likely to continue, putting pressure on prices, but the economic reopening and the associated increase in stores should support sector-wide performance."
On the other hand, Kirk expects the company's sales to shift to the US, where Martha Stewart Gummibärchen is expanding sales and attracting new customers and BioSteel is expanding across the Constellation network.
Overall, Canopy Growth's stock performance is part of a general slump in cannabis stocks as the riches of the Canadian market have proven elusive this year. The cannabis ETF THCX (-1.08%) is down 5.4% this year. Including Friday's losses, Canopy Growth's stock is down 52% this year.





