With Earnings Looming, Sell CGC Stock Before It Breaks Your Heart
- Thread starter gb123
- Start date
Just five months after breaking the $50-per-share barrier, CGC shares are down 56% with no real sign of improvement in the near future. The company lost 84 cents per share when it reported Q3 earnings on Nov. 14 – missing estimates by a whopping 56 cents. Revenue was $57.8 million, which missed estimates by more than $21 million.
Even more troubling, according to Winds Research, is that CGC appears to face a significant cash flow problem in the near future. In a research note, Winds says that the company will likely have an aggregate cash burn of $633.4 million this fiscal year, cutting its available cash to less than $1 billion.
“So by the end of the current calendar year, and assuming Canopy Growth takes no reasonable cost-cutting actions, the company would find itself in a position where it needs to raise more cash through the continued dilution of an embattled shareholder base,” Winds says.
It’s not terribly surprising that Canopy would have cash issues since it’s dumping cash into creating product lines but having problems with production. But the company’s way out of the mess doesn’t make a lot of sense, either.
Even more troubling, according to Winds Research, is that CGC appears to face a significant cash flow problem in the near future. In a research note, Winds says that the company will likely have an aggregate cash burn of $633.4 million this fiscal year, cutting its available cash to less than $1 billion.
“So by the end of the current calendar year, and assuming Canopy Growth takes no reasonable cost-cutting actions, the company would find itself in a position where it needs to raise more cash through the continued dilution of an embattled shareholder base,” Winds says.
It’s not terribly surprising that Canopy would have cash issues since it’s dumping cash into creating product lines but having problems with production. But the company’s way out of the mess doesn’t make a lot of sense, either.
