Buying a stock for a mere $2 may sound cheap on the surface, but that's only the case if there are good reasons to expect it to increase in value significantly.
Take Canopy Growth (CGC +0.82%), a leading cannabis player in Canada. Its shares are currently trading for less than $2 apiece, but does that make the company an attractive investment?
Not necessarily. Read on to find out why.
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The unpredictable Canadian market
Canopy Growth may be one of the largest pot growers in Canada, with a vast portfolio of products across dried cannabis flower, vapes, cannabis-infused drinks, and more. Beyond Canada, it has a presence in several other countries worldwide.
However, the market north of our border has been profoundly disappointing. Legalization in Canada hasn't led to the market size many had anticipated. With limited opportunities compared to expectations, significant competition, and ongoing legal and regulatory challenges, Canopy Growth has not performed well in recent years.
For that matter, no Canada-based cannabis player has. Revenue growth has been slow, at best, while consistent net losses have been the norm for the entire cannabis industry.
So, it turns out Canopy Growth is trading at $2 for a reason, and it's a very good one. If it were a company-specific issue, perhaps there'd be hope that with better execution, it could turn the tide. But the problem is systemic. Could there be a rebound on the horizon?
NASDAQ: CGC
Key Data Points
Progress in the U.S. won't save Canopy
Canopy Growth's shares caught fire at the end of 2025 because President Trump signed an executive order reclassifying cannabis from a Schedule 1 to a Schedule 3 drug. This marks a significant milestone in the U.S. cannabis industry in years. In practice, this will make banking services easier to access for pot companies and allow them to deduct normal business expenses, thereby boosting their bottom line, as well as facilitate research into the substance. That's good news for the sector, but that hardly solves Canopy Growth's problems.
Cannabis is still illegal at the federal level. That still poses significant problems, even for well-established multi-state operators in the U.S. For instance, it remains illegal to cross state lines with the substance. That keeps expenses higher than they would otherwise be and will still make it hard for cannabis companies to turn a profit. Furthermore, while Canopy Growth has a subsidiary based in the U.S., it will face intense competition, just as it did in Canada.
Where does that leave Canopy Growth? With uncertain prospects in a highly volatile market. The company isn't worth investing in, even at current levels.
