What happened
Canadian cannabis company Canopy Growth (CGC 2.41%) was up more than 39% Monday morning as of 11:30 a.m. ET. The stock jumped after the company announced several moves to improve its liquidity and pay down its debt. Canopy's shares are still down more than 76% to start the year.
So what
Two factors goosed the stock upward on Monday. Part of the move was a reaction to Canopy's shares falling more than 11% on Friday and hitting its 52-week low of $0.384. Seeing the potential to get in on a bargain, investors bought up Canopy shares on Monday.
The other factor was that the company announced that it was implementing a business plan to improve profitability. The plan included paying down $188 million in debt, plus the company said it was selling off facilities to raise another $150 million.
Now what
Investors will wait to see how long it takes for the moves to improve the company's bottom line. For the time being, the stock is only for those who don't mind a lot of risk. At its low price, volatility is to be expected. The company said that except for its BioSteel business, it expects to be earnings before interest, taxes, deprecation, and amortization (EBITDA) positive by the end of 2024.
On June 22, Canopy reported fourth-quarter and fiscal year-end results. For the fiscal year, it reported $402.9 million in revenue, down 21% and a loss of $3.31 billion, an increase of $2.97 billion in losses compared to fiscal 2022. In the fourth quarter, the company reported revenue of $88 million, down 14% year over year, and a net loss of $648 million, an increase of $59 million in losses compared to the same period last year.
