Three Majors Report Earnings

Canopy, Tilray and Cronos reported their third quarter earnings, here’s what happened.

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Like everyone else with an interest in pot companies and their stocks, we’ve been watching marijuana earnings releases closely. While it’s too early to know exactly how Canadian pot legalization will affect revenues, this quarter’s reports and commentary will be insightful.

Canopy Growth Corp.

Estimates: Analysts expect the company to lose $0.12/share.

Results: Canopy Growth Corp. lost $1.50 per share. Revenue was $23.3 million.

Canopy Growth Corp. (TSX: WEED.TO) reported earnings on Wednesday morning. Shares of the company fell to a low of $32.19 on the NYSE, a 16.09% loss in Tuesday trading. In Canada, shares went as low as $42.50, down over 16%.

That company spent more than others in the space in efforts to maintain their advantage in the quickly growing sector. The loss may have been expected based on the fact that many weed companies dumped cash into their businesses leading up to legalization.

Moreover, Canopy CEO Bruce Linton said that the company is investing in its 650 service representatives to ensure the company’s success on the ground.

Cronos Group reported their third quarter earnings Tuesday morning, and Tilray Inc. also released earnings Tuesday after the close, and Canopy Growth Inc. reported earnings Wednesday morning.

Cronos Group Earnings

Estimates: Analyst consensus predicted a $0.02/share loss and $3 million revenue.

Results: Cronos lost $0.04/share. Meanwhile revenue was up 187 percent to $3.76 million.

Cronos Group Inc. (TSX: CRON.TO) shares traded at $10.02 down 8.3 percent  in Wednesday trading.

Cronos Group is the first pure-play pot company to list on a major U.S. stock exchange. The company and Ginkgo Bioworks, which focuses on culturing cannabinoids and bringing them to a broader customer base.

Nonetheless, the company stated in September that some “pharmaceutically relevant” cannabinoids are difficult to extract. Indeed, marijuana plants often have low concentrations of many sought-after cannabinoids.

Cronos offers 2 recreational cannabis products, but questions surround the actual volumes of those products available for the fourth quarter recreational market.

“While we expect Cronos to have received its sales licence for Building 4, the company’s large 280,000 sq. ft. facility in Stayner, Ontario, the first harvest from Building 4 may have only occurred in November,” said GMP Securities analyst Martin Landry.

Tilray Inc.

Estimates: Analysts are looking for the company to lose 14 percent/share. Sales are expected to be $10 million.

Results: Tilray lost $0.20/share. Revenue was $10.047 million.

Tilray Inc. (NASDAQ: TLRY.O) stock traded as low as $99.00/share in Wednesday trading, down 11 percent.

While most of Tilray’s top line sales for this quarter came from from the medical market, the company signed supply agreements with 5 Canadian provinces for recreational product.

The company also launched High Park, its recreational weed division in Canada. That subsidiary has the rights to make and sell Bob Marley’s official pot brand, a branding boon for Tilray.

Markets pummeled shares of the company Wednesday on the larger than expected loss. Furhermore, Cowen and Company were the first analysts to cut target price to $150 from $172.

Written by Jason Bagg

Mr Bagg has over 20 years experience in financial services ranging from Capital Markets to Private Equity. Mr Bagg has helped clients build wealth, reduce taxes and plan for retirement. Drawing on his experience, Mr Bagg has spoken on different panels regarding investing and has written numerous due diligence reports and white papers in this area.

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