The cannabis sector hasn't been a favorite among investors in recent months, but marijuana company Canopy Growth (CGC -2.19%) is helping to boost stocks in the sector today. At 11:47 a.m. ET, Canopy shares were up 16.4%, and the stocks of its Canadian peers Sundial Growers (SNDL -4.33%) and Aurora Cannabis (ACB -5.32%) were up 13.5% and 9.6%, respectively. That is welcome news for shareholders who have seen these stocks drop between 29% and 53% in the last six months.
Today's bounce came after Canopy Growth reported its third-quarter fiscal 2022 financial report, showing a narrower-than-anticipated loss as well as better-than-expected revenue. Net revenue decreased 8% year over year, but it increased 7% sequentially from the previous quarter. While Canopy CEO David Klein said the company was "beginning to stabilize our Canadian business," it was its vape and drinks businesses that helped in this quarter.
Canopy said its global cannabis revenue dropped 20% year over year, but sales of its Biosteel sports hydration products soared 130%. Another driver for the reporting period was its Storz and Bickel vape products, with sales edging up 5% versus the prior-year period.
The company said it is working to improve performance in its core Canadian cannabis business, however. This includes a shift in strategy to focus on premium, high-THC products, streamlining its new product development process, and revamping its distribution and retailer engagement program.
While Sundial and Aurora stocks moved in sympathy with Canopy Growth shares today, both will have to satisfy investors by showing improvements on their own for longer-term gains. Sundial is working to regain compliance of its Nasdaq stock exchange listing for the minimum bid price requirement, as its stock recently traded at below $0.60 per share. It announced yesterday that it has been granted a 180-day extension to comply.
Aurora has had its own struggles, and investors will look to its second-quarter fiscal-year 2022 financial report tomorrow after the market closes for an update. Today's report by Canopy may have been better than expected, but the company will likely need to turn around its core business to see more sustainable gains.