Employees work at the Canopy Growth facility in Smith Falls, Ontario, Canada, on December 19, 2017.
Chris Roussakis | Bloomberg | Getty Images
Shares of Canopy Growth rallied on Tuesday after the Canadian cannabis company said it hopes to be profitable by the second half of 2022.
“We are building a history of winners in our core markets as we accelerate our U.S. growth strategy with the momentum behind the promising cannabis reform in the United States,” David Klein said Tuesday , CEO of Canopy Growth.
Shares of Canopy closed Tuesday, up 11.9%, at $ 49.09. Shares have risen about 149% over the past year, bringing their market value to more than $ 17.1 billion. As of trading on Tuesday, shares rose to a high of $ 52.92 in 52 weeks.
Earlier, the company reported that its third-quarter revenue increased 23% from a year ago, to C $ 153 million (US $ 120 million), driven by higher sales of recreational products in Canada and medicinal cannabis in international markets.
Canopy’s loss amounted to US $ 829 million (US $ 653 million), or C $ 2.43 per share, from a loss of US $ 109.6 million, or 26 cents per share. , One year ago.
The company said it has tried to improve its profitability by reducing costs and controlling expenses. These efforts, combined with projected increases in demand, should help it reap benefits by the end of next year.
Over the next 12 to 18 months, Canopy expects to reduce its costs by up to C $ 200 million.
With the new Biden administration, Canopy Growth is optimistic about the prospects for legalizing cannabis in the United States, and says it expects to enter the market this year.
“We anticipate that this legislation will include comprehensive reform to ensure restorative justice, protect public health and enforce responsible taxation, and end the ban on cannabis,” Klein said in a earnings call.
According to Owen Bennett, an equity analyst at Jefferies Group, Canopy Growth continues to position itself as the leading cannabis company in the United States for short-term legislative reform, having acquired ownership of Acreage and a stake the TerraAscend.
Bennett also cited its CBD product line Martha Stewart, which is already surpassing 94% of all U.S. CBD brands just four months after launch, as one more factor. The brand has recently added CBD pet products.
Canopy Growth issued its medium-term financial goals, estimating that compound annual revenues will increase by 40% to 50% from fiscal years 2022 to 2024. In addition, the company expects to achieve a positive operating cash flow on fiscal year 2023 and a positive free cash flow for fiscal year 2024.