Canadian pot producer Canopy Growth ( CGC ) recently said it would cut around 250 jobs — or roughly 8% of its total workforce as of March 31 — and take other steps to reduce costs.Is there any reason to buy CGC stock now?
X The cutbacks were the latest for the company, which has struggled to turn a profit.Along with the plans to reduce staff, Canopy also said it would take steps to lower cultivation and other costs, and use contract manufacturing for some products.
Canopy said it expected the measures to save up to 150 million Canadian dollars over the next 12 to 18 months.Those cuts follow earlier measures to save between 150 million to 250 million Canadian dollars.
Canopy said it expected to book 250 million to 300 million in mostly non-cash charges in its fourth quarter as result of the changes.Most of that figure relates to write-downs of extra inventory and impairments related to plants, property and equipment.
The company also said it expected to take non-cash impairment charges of between 100 million and 250 million Canadian, mainly due to goodwill and other impairments.CGC stock rose in the days after the announcement, but was down on Thursday.
Canopy has laid off staff, shaken up its executive team and closed facilities in an effort to become profitable.
The company has tried to make gains in high-grade weed and refine its approach to the U.S.In the U.S., Canopy sells Martha Stewart’s line of CBD products and products from companies that make vaporizers and sports-nutrition drinks.
Canopy on March 31 said it had appointed Judy Hong as CFO.The company also named Jonathan Di Tosto as its new COO.And it said it had created four new roles within its senior leadership ranks to be “led by seasoned executives who previously held leadership roles” at Constellation Brands ( STZ ), the parent of Corona and other alcoholic beverages and Canopy’s biggest investor.
The four roles, it said, would help Canopy “achieve its business goals in the U.S.
cannabis market in four focused areas: commercial sales, marketing, operations, and strategic alliances.” Canopy’s current CEO is a former Constellation executive, and the beverage company controls Canopy’s board.
U.S.Strategy Canopy, like other marijuana stocks, has lost market share in Canada amid heavy competition, and it has overestimated growth in smaller legal markets outside Canada.
The company has also pushed back its profitability targets.
In the U.S., the House recently passed the federal decriminalization bill known as the MORE Act.But its path in the Senate is unclear, as are the implications for U.S.decriminalization — and full legalization — on cannabis producers in Canada.
Along with its CBD business in the U.S., Canopy has an agreement in place to buy U.S.peer Acreage Holdings once pot is federally legalized in the nation.Recently, Canopy also entered into an agreement that will allow it to buy U.S.edibles maker Wana Brands once federal laws in the U.S.
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CGC Stock Fundamental Analysis CGC stock has a market cap of around $2.4 billion, according to MarketSmith.
(©Stéphane Bidouze/stock.adobe.com) The EPS Rating of Canopy Growth stock, a measure of profit growth on a scale of 1 to 99, is 54.Earnings growth is a hallmark of top stocks.
Like other big marijuana stocks, Canopy has lost money after over-investing in expansion and production.
Wall Street expects Canopy Growth to lose money in its current fiscal year.The stock also has a not-great SMR Rating of D.
CGC stock has a Composite Rating of 23 out of a best-possible 99, according to MarketSmith .Investor’s Business Daily research shows the biggest stock winners typically have Composite Ratings in the 90s.
CGC Stock Technicals IBD advises investors to buy stocks only after they set up in proper bases and rise above certain resistance levels, called buy points .But for Canopy, no such base pattern has formed, meaning no new buy point is in play.
Shares soared as high as 56.50 last year, amid 2021’s meme-stocks frenzy.
But they have since wiped away those gains.CGC stock is below its 50-day line.The stock is well below its 200-day line.
Canopy’s relative strength line , which compares its stock performance with that of the S&P 500, has moved lower.The stock’s Accumulation/Distribution grade of B indicates a decent amount of buying by institutional investors.But broader trends point to a lengthy decline for the stock overall..