Please ensure Javascript is enabled for purposes of website accessibility

Why Canopy Growth Stock Jumped Today

By Joe Tenebruso – Aug 10, 2020 at 6:51PM

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

The cannabis leader's turnaround strategy is taking hold.

What happened

Shares of Canopy Growth (CGC 3.94%) climbed 7.8% on Monday, following the release of the marijuana producer's better-than-expected fiscal 2021 first-quarter results. 

So what 

Despite the coronavirus-related challenges that have weighed on recreational cannabis sales in its core Canadian market, Canopy's revenue rose 22% year over year to $110.4 million Canadian ($82.7 million). The gains were fueled in part by higher medical marijuana sales, which more than offset a decline in adult-use sales.

A rising stock chart is superimposed on cannabis plants.

Canopy Growth's stock rose on stronger-than-anticipated earnings results. Image source: Getty Images.

Better still, cost reductions are helping to reduce Canopy's cash burn. The cannabis company generated a net loss of CA$0.30 per share, a significant improvement from the CA$0.54 per-share loss it posted in the prior-year quarter, and far better than the CA$0.35 loss analysts had expected. 

"Following our previously announced restructuring actions, we have substantially reduced our expense and cash burn in this quarter in addition to reducing headcount by over 18% since the beginning of this calendar year," CFO Mike Lee said in a press release. "Our marketing and R&D investments are being reallocated to programs with high-return potential in order to drive sales."

Now what 

Canopy's cannabis-infused beverages are off to a strong start with a No. 1 market share in Canada. Canopy is also gearing up for a push into the U.S. market with a focus on cannabidiol (CBD) products. Recent partnerships with National Football League star Patrick Mahomes and popular media personality Martha Stewart should help to drive Canopy's growth in the year ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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
$2.85 (3.94%) $0.11

*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 09/27/2022.

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.