Shares of top Canadian cannabis company Canopy Growth (CGC -2.04%) are having another rough trading session today. Specifically, the pot titan's stock price dove by as much as 13.1% during the morning portion of Friday's session.
Canopy's stock has rebounded to some degree in the interim, but the company's share price was still down by a hefty 8.13% as 12:03 p.m. ET Friday afternoon. If this line holds, Canopy's stock price will have fallen by an unsightly 69.7% so far this year.
What's weighing on Canopy's stock price today? Ahead of the opening bell, Canopy announced disappointing fiscal 2023 first-quarter financial results. Thanks in part to a whopping 1.72 billion Canadian dollar goodwill impairment charge, Canopy posted a net loss of CA$2.08 billion for the quarter. What's more, the company reported cash outflows of CA$143 million during the three-month period.
Despite some inroads in international markets such as Australia, Germany, Israel, and the U.S., Canopy's underwhelming performance in its domestic market is proving too much for the company to overcome from a profitability standpoint. The long and short of it is that there is simply too much marijuana being produced in the Canadian market, leading to widespread margin compression in the space.
Is Canopy's stock a bad news buy? Canopy's core investment thesis centers around the U.S. ending federal prohibition on marijuana. Unfortunately, the U.S. Congress doesn't seem ready to pass such a measure, instead favoring smaller bills focused on issues such as cannabis banking reforms and social justice. As a result, investors may want to watch this falling knife from the safety of the sidelines for now.