Employees are working at the Canopy Growth facility in Smith Falls, Ontario, Canada, December 19, 2017.
Chris Roussakis | Bloomberg | Getty Images
Shares of Canopy Growth rallied on Tuesday after the Canadian cannabis company said it expects to be profitable by the second half of 2022.
“We are building a gainful experience in our core markets, while accelerating our US growth strategy, with the momentum behind the promising US cannabis reform,” Canopy Growth CEO David Klein said on Tuesday.
Canopy shares closed up 11.9% on Tuesday at $ 49.09. The stock has gained about 149% in the last year, bringing its market value to over $ 17.1 billion. On trading on Tuesday, the shares rose to a 52-week high of $ 50.92.
Earlier, the company reported that its third-quarter revenue increased 23% from a year ago to $ 153 million (US $ 120 million) driven by higher sales of recreational products in Canada and medical cannabis. on international markets.
Canopy’s loss rose to C $ 829 million ($ 653 million), or C $ 2.43 per share, from a loss of C $ 109.6 million, or 26 cents a share, a year ago.
The company said it was trying to improve its profitability by reducing costs and controlling spending. These efforts, combined with the expected increase in demand, should help it make a profit at the end of next year.
Over the next 12 to 18 months, Canopy expects to reduce its costs by up to C $ 200 million.
With the new Biden administration, Canopy Growth is optimistic about the prospects for legalizing cannabis in the US, saying it expects to enter the market this year.
“We anticipate that this legislation will include comprehensive reform to ensure restorative justice, protect public health and enforce responsible taxation while ending the cannabis ban,” Klein said in a earnings call.
According to Owen Bennett, a stock analyst at Jefferies Group, Canopy Growth continues to position itself as the largest cannabis company in the United States for short-term legislative reform, after acquiring ownership of Acreage and a stake in TerraAscend.
Bennett also cited Martha Stewart’s CBD product line, which already sells 94% of all US CBD brands just four months after launch, as another factor. The brand recently added CBD pet products.
Canopy Growth has set its medium-term financial objectives, estimating that compound annual revenues will increase between 40% and 50% in fiscal years 2022-2024. fiscal year 2024.