Like the famous Cheech and Chong movie, shares of Canadian cannabis-product producer Canopy Growth (CGC) - Get Report went up in proverbial smoke on Friday after the company posted a significantly wider-than-expected quarterly loss.
The Smiths Falls, Ontario-based company reported a fiscal fourth-quarter net loss of C$1.3 billion (US$946.2 million), or C$3.72 a share, vs. a loss of C$379.1 million, or C$1.10 a share, in the comparable year-earlier period. Analysts polled by FactSet had been expecting a loss of 44 cents a share.
Sales rose to C$115.1 million from C$106.5 million a year ago, above analysts’ forecasts.
The loss was driven by a steep decline in demand for pot and pot-infused products that sparked Canopy Growth to not only take a C$743 million quarterly charge - a surprise to analysts and investors - put to also pull its fiscal 2021 guidance.
The maker of cannabis-infused products including drinks, chocolate and vape devices, which had already been struggling with lower-than-expected consumer demand, took a particularly strong hit through the January-March period as the Covid-19 pandemic turned consumers off of non-essential goods.
Lack of demand for pot itself also cast a fog over the company’s fourth-quarter results, with recreational pot-product sales to retailers including softgels, oils and “Cannabis 2.0 products” dropping 31% from the third quarter.
Offsetting the declines was an increase in international cannabis sales, specifically from Germany, which increased 14% from the third quarter. International cannabis revenue accounted for 24% of total cannabis revenues in Q4 2020.
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