Canopy Growth Corp climbs 20% on Friday following upbeat quarterly performance results

on Feb 15, 2020
Updated: Mar 11, 2020
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  • Canopy Growth Corp climbs 20% on Friday following upbeat quarterly performance results.
  • Canopy prints C$123.8 million in revenue in Q3 versus the analysts' estimate of C$105.1 million.
  • Canopy records 35 cents of loss per share in Q3 versus the analysts' estimate of 49 cents.

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Canopy Growth Corp announced on Friday that it was successful in containing its loss in the recent quarter. Thanks to the company’s commitment towards costs reduction, the Canadian cannabis company recorded smaller than expected loss in Q3 that saw its stock trading up by 20% later in the day.

The company posted a massive 14% reduction in its operating costs in the third quarter. Expanding its gross margin in the recent quarter, the company expressed its plans for further extending the cost-cutting strategy in an attempt to streamline the business.

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Canopy Growth Corp’s Performance In The Stock Market

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With a 20.5% gain on Friday, the company touched C$31.24 on Friday. Although it closed the week slightly lower at around C$30 per share that marks an around 15% gain for the company in 2020 so far. Canopy Growth Corp’s performance in the stock market was largely weighed in 2019 as well. The stock opened at around C$38 in January 2019. Share prices were reported to have surged to as high as around C$68 in May. The second half of the last year, however, brought bad news for the company and pushed its stock sharply down to C$25 per share around which it closed the year. The company has failed to recover its losses so far in 2020.

The 20% decline on Friday was branded as Canopy’s worst since August 2018 in the stock market. The optimism of the Canopy’s quarterly performance fueled strength to a range of pot stock on Friday including Cronos, Aphria, Aurora Cannabis, and CannTrust. The Horizons Marijuana Life Sciences Index ETF increased 7.1% following Canopy’s earnings report.

Canopy’s Figures Versus Analysts’ Estimates

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According to Refinitiv, analysts had expected the company to generate C$105.1 million in revenue in the third quarter. In terms of loss per share, they anticipated Canopy to post 49 cents in the recent quarter. In its earnings report on Friday, the company recorded significantly higher C$123.8 million in revenue while the loss per share was printed at a much lower 35 cents in the fiscal third quarter.

In the quarter that ended on December 31st, the Canadian cannabis company registered its gross margin (excluding fair-value adjustments) to have expanded to 34% as compared to 26% in the same quarter last year.

On the cash and equivalents front, Canopy noted C$1.56 billion at 31st December as compared to March 31st’s C$2.48 billion.

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