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Shares of Canopy Growth (CGC) - Get Canopy Growth Corporation Report  were falling hard on Friday, down roughly 7.8% to $40.30. 

The decline came following the company's fourth-quarter earnings results and leaves Canopy stock teetering on a key support level near $40. Will it hold? Just one day after earnings and it's still too early to say.

Had the company's report been less jarring, Canopy likely wouldn't be down as much as it is right now. Its non-GAAP loss of 98 cents per share missed estimates by 66 cents, which seems to have thrown investors a curve ball.

On the plus side, Canopy received shareholder approval on Wednesday evening for its multi-billion takeover of Acreage Holdings (ACRGF) . Further, Canopy Growth managed to more than quadruple its revenue year over year, with sales hitting C$94.1 million, slightly topping analysts' expectations.

If investors aren't worried about profits and are strictly focused on market share growth, then this was a great quarter. However, if they are concerned about losses and spending, there's reason for some hesitation. Given Friday's reaction, more of the latter than the former seems to be in play.

Trading Canopy Growth Stock

Daily chart of CGC stock.

The decline in Canopy Growth stock is reverberating through the cannabis industry. Aurora Cannabis (ACB) - Get Aurora Cannabis Inc. Report , Cronos Group (CRON) - Get Cronos Group Inc Report , New Age Beverages (NBEV) - Get NewAge Inc Report and Tilray (TLRY) - Get Tilray, Inc. Report  traded down bout 5%. Ironically, despite having a roughly 40% stake in CGC stock, Constellation Brands (STZ) - Get Constellation Brands, Inc. Class A Report is down less than 2% on the day.

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As for Canopy Growth stock, shares are teetering on notable support. The $40 level has buoyed the name several times throughout 2019, with it only really failing in late May. Even then though, it was only temporary. Shares dropped to $38.38, before reclaiming the $40 level the next day. By and large, this level has kept CGC stock afloat.

Should it hold again, Canopy has three upside targets: The 20-day/200-day moving average confluence near $42.50, the 50-day moving near $44.50 and an upside target of $48. At the moment, $48 seems like a long way off given Friday's price action. Shares also need to get above $44 to negate its worrisome trend of higher lows. 

It's also worth mentioning that just below $40 is the backside of prior downtrend resistance (purple line). Bulls' hope is that CGC stock is able to maintain above this mark.

If $40 support fails to hold, there are a few downside levels to keep in mind. The first is the $38.38 lows from a few weeks ago. Below that, downtrend support (blue line) sits just below $38. Finally, the 61.8% retracement for the one-year range sits at $37.60.

The bottom line: Watch $40.

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Watch: How This Cannabis Software Company Became a First of Its Kind

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.