Canopy Growth Corporation, the Canadian-based marijuana producer that is one of the world’s largest, was expected to have had a bounteous quarter. Instead, as investors learned today (Nov. 14), second-quarter revenue was lower than the previous quarter, with the biggest loss in the company’s history. The share price tumbled in response, closing down more than 10 percent at $34.30.
Company’s executives say its results are nothing to worry about, because it’s still too early for weed legalization in Canada to have had much of an impact.
Speaking to analysts today (Nov. 14), chief executive Bruce Linton said the company had shipped “really no revenue”—just enough to stress test their systems. “Provinces are screaming ‘Get me product!’, which means that you don’t necessarily optimize cost,” he added. “We’re finding that craziness for the first 30 days is now starting to become a predictable, more reasonable model and we can actually start and really look at how we run the business versus how we satisfy the anti-prohibition.”
It’s a plausible explanation, but one that only goes so far to explain a daunting set of numbers. After all, Canopy did post a net loss of CA$330.6 million (US$250 million). Still, the revenue of CA$23.3 million was pretty close to the company’s expectations, and a 33% year-on-year increase. The problem, it seems, is how incredibly high investors’ aspirations appear to be.