Shares of Canopy Growth (CGC 0.09%) were tanking 15.7% as of 11:10 a.m. ET on Friday. The big drop came after the Canadian cannabis producer announced its fiscal 2022 fourth-quarter and full-year results before the market open.
Net revenue in its fiscal fourth quarter was 111.8 million in Canadian dollars ($87.3 million), a 25% year-over-year decline. The company posted a net loss in the quarter of CA$579 million, or CA$1.46 per share. Analysts surveyed by Refinitiv were expecting fiscal fourth-quarter revenue of CA$129 million and a loss of CA$0.31 per share.
Management tried to focus on the positives in Canopy's latest quarterly update. It highlighted that the company maintained its No. 1 position in the Canadian premium flower market and nearly doubled its share of the mainstream flower market in the recent quarter.
However, today's sell-off appears to be warranted. Granted, the company faces some market headwinds that are beyond its control. But there's no escaping that Canopy Growth's business continues to head in the wrong direction. Its shares are doing so as well, with the stock plunging more than 80% over the past 12 months.
At one point, Canopy Growth expected to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of fiscal 2022. The company lowered those expectations after disappointing results in fiscal second quarter.
Now, Canopy thinks that it will generate positive adjusted EBITDA in fiscal year 2024. That projection, however, excludes any investments in its BioSteel sports drinks and U.S. THC businesses.
Moving the goalposts this way is likely frustrating to investors. Until Canopy Growth can demonstrate that it's on a clear path to profitability, it's best to remain on the sidelines with this floundering stock.