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Summary
- Canopy Growth is shutting down five plants and will lay-off nearly 220 employees
- The pot firm aims to improve its profitability with this cost-cutting measure.
- Canopy stocks (TSX:WEED) declined over 5 per cent following the announcement.
- WEED stocks have advanced by over 42.5 per cent year-to-date (YTD).
With Canada being the second nation to legalize marijuana, the nation’s pot firms had the advantage of being early movers in the industry. The legalization of cannabis at the federal level in the United States will open newer avenues for the industry.
Top pot firm Canopy Growth Corporation (TSX:WEED), along with several other leading cannabis companies, had started to outline its US plans. The company aimed launch its cannabis-infused beverage lineup in the US, through a licensing pact with Acreage Holdings Inc., which it has the option to acquire once cannabis is federally allowed in the US.
However, Canopy Growth made a big rejig announcement via its recent exchange filing on December 9. The cannabis firm decided to cease operations in five facilities, which include St. John's, Fredericton, Edmonton, Bowmanville, and its outdoor cannabis cultivation activities in Saskatchewan. Consequently, nearly 220 staff will be laid off.
The company says it is important step towards accomplishing its targeted C$150 million-C$200 million profits in its upcoming two quarters.
Let us delve into how Canopy Growth stocks are trading in the wake of the above developments:
Canopy Growth Corporation (TSX:WEED)
Current Stock Price: C$ 34.91
Smiths Falls-based cannabis manufacturer operates across Canada via a portfolio of brands that comprise of Tweed, Spectrum Therapeutics, and CraftGrow.
Following the announcement, the pot firm stocks plunged more than 5 per cent on December 9. However, the large cap cannabis’ stock soared over 55 per cent in the last six months and yielded nearly 42.5 per cent returns year-to-date (YTD).
Its 30-day average stock trading volume is 2.35 million units. WEED stock ranks among TMX’s Top Healthcare stocks that have surpassed their peers across the TSX and TSXV in the last 30 days.
The company’s current market capitalization stands at approximately C$ 13 billion.
Its price-to-book (P/B) ratio is 2.643 and its debt-to-equity ratio is 0.14. The price-to-earnings (P/E) ratio stands at 61.60 and it offers earnings per share (EPS) of C$ 0.59, as per TMX data.
In the second quarter of fiscal 2021, the cannabis producer reported a record net revenues of C$ 135.3 million in Q2 2021, propelled by gains in recreational pot and vaporizer sales.
The company’s cash and short-term investments amounted to C$ 1.722 billion as of September 30, 2020, a drop of C$ 254 million from C$ 1.976 billion as of March 31, 2020, led by EBITDA loss and capital investments.
