Canopy Growth (NASDAQ:CGC) is among the top Canada-based cannabis producers that investors are watching for clues on how the overall legal marijuana market is performing. Today’s decline of more than 8% in CGC stock suggests continued weakness may be forthcoming.
The cannabis producer reported revenue for the 2025 fiscal year of $75.8 million, which was down significantly from last year’s total of more than $88 million. Even worse, Canopy reported that its net loss ballooned to $127.1 million, or $1.60 per diluted share this past quarter, much higher than the loss seen during the same quarter last year (just $38.1 million).
With revenue declining and losses mounting, investors are clearly in the mood to sell CGC stock today. The company’s overall valuation is now hovering around $750 million.
Let’s dive into what to make of these moves.
Why is CGC Stock Down Today?
These numbers are certainly not encouraging for investors who have been bullish on the growth trends expected from cannabis in the Canadian market since legalization in 2018.
Indeed, the growth seen over the past six years has fallen far short of what analysts expected by this time. With revenue declining for Canopy and other major players in cannabis, the question is what this may portend for other markets. The U.S., for example, hasn’t yet legalized marijuana but may do so in coming years, depending on how voters vote come November.
If the Canadian market has peaked just over five years into legalization, how to value U.S.-based cannabis stocks becomes tricky. Accordingly, we’re seeing broader moves lower in other cannabis stocks on this news, as investors price in increased risk.
For Canopy specifically, there’s a need for efficiency and an increased likelihood of additional divestitures. In my view, this is a sector that looks overly risky right now. Until there’s some sort of growth trajectory to point to, I wouldn’t be surprised to see similar declines moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
