Canopy Growth just proposed stock sale: find out more

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on Jun 6, 2024
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  • Canopy Growth has established a $250 million at-the-market equity program.
  • Here's why the news isn't sitting well with $CGC shareholders today.
  • Canopy Growth stock is currently up well over 150% versus its YTD low.

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Canopy Growth Corp (NASDAQ: CGC) says it has established an “at-the-market equity program”. Shares of the cannabis firm are in the red at writing. 

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Canopy Growth may sell up to $250 million of it stock

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The program will enable $CGC to raise up to $250 million through selling its stock in the United States and Canada. 

Canopy Growth will use the proceeds to lower its debt and make acquisitions, as per a press release on Thursday. 

The company based out of Smiths Falls, Canada has been fairly active in making acquisitions this year. It recently exercised options to acquire Wana Brands and Jetty. 

Earlier in June, $CGC also exercised its option to add Acreage Holdings – a multistate operator in the cannabis industry to its portfolio as part of its expansion in the United States. 

Why didn’t the $CGC shareholders like today’s announcement

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Canopy Growth Corp also intends to use proceeds from the proposed stock sale for working capital and general corporate purposes. The press release added:

The volume and timing of sales under the ATM Program, if any, will be determined in the Company’s sole discretion and are subject to customary conditions precedent.

The proposal is not particularly sitting well with investors since it will dilute their stake in $CGC that’s currently up well over 150% versus its year-to-date low in March. 

Shares of the cannabis firm have done well this year due to positive moves by President Joe Biden. These include his push to reclassify cannabis as a Schedule III drug that is broadly considered safe for use. Canopy Growth stock does not, however, pay a dividend at writing.

Is Canopy Growth stock worth owning in June?

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Earlier this week, experts at Alliance Global Partners raised their price target on Canopy Growth stock sharply from C$6.0 to C$11. But that still doesn’t represent a meaningful upside from its current price.

The stock sale proposal on Thursday arrives only days after the cannabis company reported a year-over-year decline in net loss to C$92.3 million for its fourth financial quarter as revenue jumped 7.0% versus last year to C$72.8 million. At the time, David Klein – its chief executive said:

Entering FY2025, Canopy has growing businesses in all of the world’s most attractive cannabis markets, a leading portfolio of high-impact brands, and a rapidly developing U.S. ecosystem.

Canopy Growth ended its recent quarter with $203 million of cash (including equivalents and short-term investments) and no material debt due until March 2026 on its balance sheet.

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