As some of you may be aware, we have seen a downturn in numerous marijuana stocks over the past number of weeks. Of particular importance is Canopy which has seen a decline from the 70’s to the 40’s and to some this is of concern.
In my opinion, what we are seeing is perfectly normal in a budding industry (excuse use the pun). Now that marijuana’s legal analysts are making judgement calls based on short-term results and as we all know, while this keeps them employed, it’s the long-term that really counts.
For example, according to Brandon Dorfman, at Pot Network, Canopy has spent the last few weeks before legalization, “stress testing” systems which has led to a drop-in marijuana sales. In addition, according to Bruce Linton the CEO of Canopy, delays in exporting marijuana to Germany has also affected the last quarter negatively.
But there’s plenty of good news in the horizon. According to Bloomberg analysts, it is predicted that Canopy will increase their revenues to 283.7 million versus 214 million by the end of 2018. Further good news and not taken into consideration in the past quarter results is that Canopy expects to meet their supply commitments to the Provinces despite their being a shortage of cannabis, and according to Pot News, Canopy has already shipped out double the amount in November then what they did in October.
Another key factor for future growth is the massive investment by Constellation brands into Canopy, to the tune of 5 Billion dollars which has not been reported on the books for the last quarter. For those of you who are not aware of Constellation Brands, they are one of the world’s largest beverage companies including beverages such as Corona and Modelo which will be using Canopy products to infuse into their beverages on a global scale.
According to Yahoo news today, CEO Bruce Linton said “Canopy is mulling the purchase of numerous technologies”. At the end of the day canopy is well poised for significant growth over time and will in my opinion emerge as the biggest global player in the years to come. Furthermore, Canopy Growth CEO Bruce Linton told Yahoo Finance’s Midday Movers on Wednesday that marijuana stocks are in a bubble. Linton’s comments follow Canopy’s worst quarter in three years, where the company failed to meet analyst expectations which snowballed into a 13 percent drop in market value Wednesday as well.
Still, Canopy Growth is up 30 percent overall for the year, placing the company in a good position to outlast any bubble, according to what Linton said on Midday Movers. “For sure there’s a marijuana bubble,” he said on the show on Wednesday. “I don’t know somebody who’s not talking about it. And I don’t know somebody who isn’t putting out a press release that says they’re in the business. And when they put the press release out, their company is worth half a billion dollars.”
So, for all of you Canopy investors, stay invested for the long-term, and you may want to consider adding to your holding if you have a few bucks to spare.
If you should have any questions or concerns please drop me a line.