Prosper Junior Bakiny, The Motley Fool
5 min read
-
Canopy Growth has lost almost all of its market value in the past five years.
-
The company's prospects remain dim, and its financial results are unimpressive.
-
There's hardly any good reason to expect the stock to recover.
Canopy Growth (NASDAQ: CGC) emerged as a leader in the cannabis industry when Canada legalized recreational, adult use of the substance in 2018. Investors had high hopes for the company and the rest of the market but, unfortunately, these hopes have now evaporated.
Over the past five years, Canopy Growth has lost 99% of its value, and the company's shares now trade for under $2 apiece. Yet the stock remains unattractive. Here's why.
Canopy Growth has a deep footprint in the Canadian cannabis market, encompassing both recreational and medical sectors, but the company's business extends far beyond this neighbor to the north. The pot grower has significant international operations, notably through Storz & Bickel, a subsidiary that manufactures and markets vape devices in various countries. Canopy Growth's suite of products spans dried flower, vapes, pre-rolls, oils, cannabis-infused drinks, and more.
Despite having a significant worldwide footprint and a vast portfolio, the company has faced substantial headwinds. The cannabis market remains severely regulated, even in Canada, where laws are more lax. Never mind in other countries like the U.S., where the substance remains illegal at the federal level. Further, the perception that the pot market would become far more lucrative following Canada's decision to legalize weed created a bit of a gold rush, leading to stiff competition and oversupply problems in the market.
Although Canopy Growth remained one of the more notable players throughout all this, that's not saying much, considering how poorly the industry has performed over the past five years. Meanwhile, the company's financial results remain horrendous.
On May 30, Canopy Growth reported its financial results for the fourth quarter of its fiscal year 2025, ending on March 31. Though the company's cannabis revenue in Canada increased by 4% year over year, Canopy Growth's net revenue was 65 million Canadian dollars, down 11%, compared to the year-ago period. The pot grower's performance in international markets negatively impacted its overall performance.
Elsewhere, Canopy Growth remains deeply unprofitable. Its net loss per share for the period was CA$1.43, much worse than the CA$1.03 loss per share it reported in the year-ago period.
