What happened

Marijuana stocks took a tumble today after industry leader Canopy Growth (CGC -4.29%) stock reported a larger-than-expected fiscal Q4 2021 loss this morning.

Heading into the final quarter of Canopy's fiscal 2021, analysts polled by S&P Global Market Intelligence had forecast the company would lose $0.20 per share pro forma and $0.22 per share when earnings were calculated according to generally accepted accounting principles (GAAP). Losses for the full fiscal year were estimated to come in at $0.62 per share pro forma and $0.72 per share GAAP -- but Canopy missed those estimates badly.

For Q4 2021, Canopy says it actually lost $1.85 per share Canadian ($1.54). For the year, losses totaled CA$4.69 ($3.90). Cronos's quarterly losses were only about half as bad as what it suffered in the year-ago Q4, but full-year losses increased 23% year over year.  

3 red arrows going down and crashing through the floor

Image source: Getty Images.

So what

Shares of Canopy Growth tumbled 4.6% through 11:15 a.m. EDT in response to the bad news, dragging down shares of Canadian rivals OrganiGram (OGI -5.37%) and Cronos (CRON -1.18%) in sympathy. OrganiGram stock is now down 7.5% and Cronos 8.5%, despite neither of those two stocks having any bad news of their own to report.

But is that fair? Was Canopy's news even bad news?

Canopy doesn't seem to think so. Canopy led off its report with a boast that its revenue grew 37% in fiscal 2021 "with strong double-digit growth across both cannabis and other consumer products businesses," and it insisted it "maintains #1 market share of the total [marijuana] flower category in Canada." Furthermore, management says it "remains on track to achieve positive Adjusted EBITDA during the second half of FY 2022."

Now what

But consider all the qualifications needed to make that last statement: Canopy was unable to promise actual GAAP profits, so it promised "earnings before interest, taxes, depreciation, and amortization" (EBITDA) instead -- and not even real EBITDA, but just some "adjusted" variant thereof. All this suggests that real profitability remains far, far off even for one of the strongest players in the marijuana industry.

Indeed, according to the latest estimates from S&P Global Market Intelligence, it will be 2024 before Canopy reports its first net profit under GAAP accounting standards. Similarly for OrganiGram -- and Cronos investors will have to wait until 2025 before GAAP profits arrive.

If investors are starting to get impatient for profits, I cannot say I blame them.