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Canopy Growth (TSE:WEED)
TSX:WEED

Canopy Growth (WEED) AI Stock Analysis

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Canopy Growth

(TSX:WEED)

Rating:47Neutral
Price Target:
Canopy Growth's overall score reflects significant financial challenges, including declining revenue and profitability issues. While technical indicators show some positive signals, the valuation remains unattractive. Improvements in EBITDA and cash flow are positive, yet overall revenue decline and market competition pose risks. Recent strategic initiatives, including debt reduction and market expansions, offer potential for improvement but are currently insufficient to offset existing financial weaknesses.
Positive Factors
Cost-reduction plans
Management has identified new cost-reduction plans that are expected to lead to cost savings of at least C$20mn over the next 12-18 months.
Negative Factors
Execution problems
Canopy has lingering execution problems, such as reliable product supply, resource allocation, supply chain coordination, and poor alignment between consumer demand and products sold.
Regulatory changes
Recent regulatory changes in Poland are putting near-term pressure on its international operations.
Stock price decline
Canopy's stock price has plunged significantly due to its two recent ATM programs to raise cash and other unfavorable factors.

Canopy Growth (WEED) vs. iShares MSCI Canada ETF (EWC)

Canopy Growth Business Overview & Revenue Model

Company DescriptionCanopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis and hemp-based products for recreational and medical purposes primarily in Canada, the United States, and Germany. It operates through two segments, Global Cannabis and Other Consumer Products. The company's products include dried cannabis flower, extracts and concentrates, beverages, gummies, and vapes. It offers its products under the Tweed, 7ACRES, 7ACRES Craft Collective, DOJA, Ace Valley, Quatreau, Deep Space, First + Free, Surity Pro, Spectrum Therapeutics, Vert, Tokyo Smoke, Twd, Martha Stewart CBD, DNA Genetics, BioSteel, Storz & Bickel, This Works, HiWay, Simple Stash, Whisl, and Truverra brands. The company was formerly known as Tweed Marijuana Inc. and changed its name to Canopy Growth Corporation in September 2015. Canopy Growth Corporation was incorporated in 2009 and is headquartered in Smiths Falls, Canada.
How the Company Makes MoneyCanopy Growth makes money primarily through the cultivation, processing, and sale of cannabis and cannabis-derived products. Its revenue streams include the sale of recreational cannabis products in Canada, medical cannabis products globally, and CBD products in various markets. The company also generates income through its strategic partnerships and investments, such as with Constellation Brands, which provides expertise in brand building and distribution. Additionally, Canopy has pursued acquisitions and developed a portfolio of brands to expand its market reach and product offerings, thus contributing to its earnings.

Canopy Growth Earnings Call Summary

Earnings Call Date:May 30, 2025
(Q4-2025)
|
% Change Since: -21.19%|
Next Earnings Date:Aug 08, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in the Canada medical business and significant restructuring efforts aimed at cost reduction and operational improvements. However, these were offset by notable underperformance in international markets, challenges with Acreage Holdings, and gross margin pressures. While there are positive signs from new product innovations and restructuring efforts, the financial challenges and market underperformance present significant hurdles.
Q4-2025 Updates
Positive Updates
Strong Performance in Canada Medical Business
The Canada medical business grew sales by 13% year-over-year, benefiting from a shift towards insurer patients and a larger product assortment in the Spectrum online store.
Restructuring and Cost Reduction
Canopy Growth has restructured its operations to improve synchronization and reduce costs, identifying at least $20 million in annual operating expense reductions over the next 12 to 18 months.
Improvement in Adjusted EBITDA
There was a year-over-year improvement in adjusted EBITDA, despite missing the target of positive adjusted EBITDA for fiscal 2025.
Positive Early Signs from Product Innovations
New products such as Claybourne infused pre-rolls and Tweed and 7ACRES all-in-one vapes have shown positive early consumer response, with encouraging market share growth.
Negative Updates
Underperformance in Key Markets
Revenue fell short in Storz & Bickel, Poland, and Australia medical businesses, with a notable 23% year-over-year decline in Storz & Bickel revenue.
Challenges with Acreage Holdings
Acreage Holdings continues to face liquidity challenges, underperforming in expectations, particularly due to delays in Ohio's adult-use market opening.
Decline in International Markets Sales
International market sales, excluding U.S. CBD, declined by 23% in Q4 fiscal 2025, affected significantly by regulatory changes in Poland and increased competition in Australia.
Gross Margin Pressures
Gross margins were negatively impacted by higher costs in new product launches and inventory write-downs, affecting overall profitability.
Company Guidance
During Canopy Growth's fourth quarter and fiscal year 2025 financial results conference call, several key metrics and strategic guidance were highlighted. The company reported a 13% growth in its Canadian medical business for fiscal 2025, despite a decline in the broader market. Canopy streamlined its operations by reducing a third of its lowest-performing SKUs, focusing on high-demand product categories such as high-potency flower, pre-rolls, and vapes, and targeting an annual operating expense reduction of at least $20 million over the next 12 to 18 months. Additionally, Canopy made a $100 million U.S. early prepayment on its senior secured term loan, reducing annual interest expenses by approximately $13 million U.S. Efforts to improve supply chain synchronization resulted in increased fill rates from the mid-80s to mid-90s percentage range. Looking ahead, Canopy aims to achieve positive adjusted EBITDA and generate positive free cash flow by accelerating growth in its global medical cannabis and Canadian adult-use businesses, and by launching a new device from Storz & Bickel later in the year.

Canopy Growth Financial Statement Overview

Summary
Canopy Growth faces significant financial challenges with declining revenue, negative profitability margins, and cash flow inefficiencies. Despite some improvements in gross profit margin, the company's balance sheet stability is weakened by declining equity and poor returns on equity. The cash flow position remains weak, highlighting the need for strategic improvements to achieve sustainable financial health.
Income Statement
25
Negative
Canopy Growth has experienced a significant decline in revenue from 2022 to TTM (Trailing-Twelve-Months), with a revenue growth rate of -46.8%. The gross profit margin for TTM is 27.9%, which shows improvement from previous periods. However, net profit margin remains deeply negative at -169.7%, indicating ongoing profitability challenges. The company also reports negative EBIT and EBITDA margins, reflecting operational inefficiencies.
Balance Sheet
40
Negative
The company's balance sheet shows a moderate debt-to-equity ratio of 0.83 in TTM, indicating a balanced approach to financing with equity. However, a declining equity ratio of 50.8% in TTM suggests a reduction in asset leverage. Return on equity is significantly negative at -79.4%, pointing to poor returns on shareholder investments.
Cash Flow
30
Negative
Canopy Growth's cash flow statement reveals a negative free cash flow with no growth, as well as an operating cash flow to net income ratio of 0.33 in TTM, reflecting inefficiencies in converting income into cash. The company's free cash flow to net income ratio is negative, indicating operational cash flow challenges.
Breakdown
TTMMar 2024Mar 2023Mar 2022Mar 2021Mar 2020
Income StatementTotal Revenue
276.75M297.15M402.90M520.33M546.65M398.77M
Gross Profit
77.23M79.90M-104.14M-193.05M66.96M-31.68M
EBIT
-124.87M-228.71M1.67B-1.08B44.30M-1.67B
EBITDA
-348.67M-312.83M-2.88B-121.15M-1.50B-1.31B
Net Income Common Stockholders
-469.66M-657.27M-3.31B-320.49M-1.67B-1.39B
Balance SheetCash, Cash Equivalents and Short-Term Investments
210.77M203.46M782.60M1.37B2.30B1.98B
Total Assets
1.30B1.30B2.44B5.62B6.82B6.86B
Total Debt
683.17M668.00M1.31B1.50B1.58B625.82M
Net Debt
512.87M497.70M629.87M724.99M428.31M-677.36M
Total Liabilities
799.82M799.82M1.68B1.98B3.20B1.68B
Stockholders Equity
500.37M500.37M758.43M3.59B3.48B4.89B
Cash FlowFree Cash Flow
-162.87M-285.95M-568.10M-593.92M-639.87M-1.49B
Operating Cash Flow
-154.66M-281.95M-557.55M-545.81M-465.73M-772.63M
Investing Cash Flow
-7.30M241.59M433.38M230.82M-884.11M-347.65M
Financing Cash Flow
173.09M-465.06M-19.69M-45.53M1.26B-57.16M

Canopy Growth Technical Analysis

Technical Analysis Sentiment
Negative
Last Price1.86
Price Trends
50DMA
1.80
Positive
100DMA
2.11
Negative
200DMA
3.96
Negative
Market Momentum
MACD
>-0.01
Positive
RSI
45.61
Neutral
STOCH
14.85
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WEED, the sentiment is Negative. The current price of 1.86 is below the 20-day moving average (MA) of 2.12, above the 50-day MA of 1.80, and below the 200-day MA of 3.96, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.61 is Neutral, neither overbought nor oversold. The STOCH value of 14.85 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:WEED.

Canopy Growth Risk Analysis

Canopy Growth disclosed 92 risk factors in its most recent earnings report. Canopy Growth reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Acreage's financial statements express doubt about its ability to continue as a going concern, which could have a negative impact on Canopy USA's business, financial results and operations and have an adverse impact on the Company's United States strategy, and, ultimately, the Company's financial results and operations, and, in the event Acreage cannot satisfy its debt obligations as they become due, the Acquired Debt may not be repaid and the Company may lose the entirety of its investment. Q4, 2024

Canopy Growth Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
54
Neutral
$5.28B3.29-45.38%2.80%16.77%-0.08%
47
Neutral
$348.88M-122.10%-16.27%
ACACB
$306.03M34.334.78%
$749.50M15.114.61%
$631.14M-25.08%
$1.23B24.232.83%
$761.31M-12.39%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:WEED
Canopy Growth
1.86
-7.77
-80.69%
ACB
Aurora Cannabis
5.41
-0.27
-4.75%
CRON
Cronos Group
1.91
-0.52
-21.40%
CURLF
Curaleaf Holdings
0.85
-3.64
-81.07%
GTBIF
Green Thumb Industries
5.10
-7.05
-58.02%
TCNNF
Trulieve Cannabis
3.96
-5.19
-56.72%

Canopy Growth Corporate Events

Product-Related AnnouncementsBusiness Operations and Strategy
Canopy Growth Launches Spectrum Reserve: A New Premium Medical Cannabis Brand
Positive
Apr 2, 2025

Canopy Growth has launched Spectrum Reserve, a new premium medical cannabis brand in Canada, designed to cater to the evolving needs of medical cannabis patients. The brand will regularly introduce new strains based on patient feedback, focusing on potency and terpene levels to ensure premium quality. This initiative reinforces Canopy Growth’s leadership in the medical cannabis sector by combining advanced cultivation techniques with a commitment to delivering high-quality products, potentially strengthening its market position and enhancing its offerings for stakeholders.

Private Placements and FinancingBusiness Operations and Strategy
Canopy Growth Reduces Debt with Early Loan Prepayment
Positive
Apr 1, 2025

Canopy Growth has announced an optional early prepayment of US$100 million on its senior secured term loan, resulting in annual interest savings of approximately US$13 million and extending the loan’s maturity to September 2027. This strategic move strengthens the company’s balance sheet by reducing debt and lowering interest costs, positioning Canopy Growth for sustainable growth in the evolving global cannabis market.

Private Placements and FinancingBusiness Operations and Strategy
Canopy Growth Launches US$200 Million Equity Program to Strengthen Financial Position
Positive
Feb 28, 2025

Canopy Growth Corporation has launched a new at-the-market equity program allowing the issuance and sale of up to US$200 million in common shares. The proceeds are intended to bolster the company’s financial position by reducing debt, enhancing cash reserves, and supporting strategic mergers and acquisitions. This move is expected to strengthen Canopy Growth’s market positioning and operational capabilities.

Product-Related AnnouncementsBusiness Operations and Strategy
Canopy Growth Expands Tweed Brand into German Medical Cannabis Market
Positive
Feb 27, 2025

Canopy Growth has launched its Tweed brand in the German medical cannabis market, introducing four new strains through a partnership with Portuguese cultivator Gro-Vida. This expansion, which includes the earlier introduction of the Glitter Bomb strain via Cansativa, aims to meet the increasing demand for high-THC genetics among German medical patients, enhancing Canopy Growth’s presence in the European market.

Product-Related Announcements
Canopy Growth Expands Beverage Lineup with New Flavors
Positive
Feb 13, 2025

Canopy Growth has expanded its Deep Space Propulsion beverage lineup with the launch of two new cannabis-infused flavors: Rocket Root Beer and Charged Cream Soda. These beverages, developed in Canada, feature 10mg of THC and 10mg of CBG per can, offering consumers a unique taste experience. The expansion strengthens Canopy Growth’s leadership in the cannabis beverage category, offering a premium range of drinks now available in select regions across Canada.

Product-Related AnnouncementsBusiness Operations and StrategyFinancial Disclosures
Canopy Growth Shows Strong Product Performance and Financial Improvements in Q3 FY2025
Positive
Feb 7, 2025

Canopy Growth reported its financial results for the third quarter of fiscal year 2025, highlighting a strong performance in its medical cannabis segment and an increase in international market revenues. The company’s new product, Claybourne infused pre-rolls, quickly achieved notable market share in Canada. Despite a 5% decrease in net revenue compared to the previous year, excluding divested businesses, revenue actually grew by 8%. The company’s financial position improved with a reduction in total debt and operating losses, driven by cost savings and strategic actions.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.