Please ensure Javascript is enabled for purposes of website accessibility

Why Canopy Growth Stock Is Rebounding Today

By Keith Speights - Mar 10, 2020 at 11:54AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A better day for the overall stock market is helping the pot stock make a small comeback.

What happened

Shares of Canopy Growth (CGC -3.46%) were up 3.6% as of 11:31 a.m. EDT on Tuesday after rising as much as 10.8% earlier in the day. The small rebound for the Canadian cannabis producer was part of an overall stock market comeback after Monday's huge drop.

So what

Don't read too much into Canopy Growth's slight bounce today. For that matter, don't read too much into its big drop Monday, either.

Shadow of a Canadian maple leaf on top of a pile of cannabis leaves

Image source: Getty Images.

The current stock market volatility is due to two factors: worries about the COVID-19 coronavirus and plunging oil prices. Neither should affect the long-term prospects for marijuana stocks. It's possible that the coronavirus outbreak could cause consumers to stay home rather than go to retail cannabis stores. That could present a short-term concern for Canopy Growth and its peers, but shouldn't be a long-term issue.

Now what

While Canopy Growth stock is likely to remain highly volatile, the more important thing for investors to watch is how the company performs financially. New CEO David Klein has taken solid steps to reduce Canopy's spending, including shutting down two greenhouses. Canopy also should benefit from growing derivative sales in Canada's Cannabis 2.0 market and from an expanding number of retail marijuana stores in Ontario.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Canopy Growth Stock Quote
Canopy Growth
$3.48 (-3.46%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.