CGC Stock: Hopeful Times Ahead For Canopy Growth (NYSE:CGC)?

Canopy Growth (TSX:WEED) (NYSE:CGC) has managed to grow despite the difficulties.  The company has, however, lost over 70% of its value over the past year, having burned out a significant portion of its cash. The company came forward with the announcement of letting go of 500 of its employees in March, followed by another announcement in April of its facility in Yorkton, Saskatchewan being shut down.

Stock A Safer Investment Bet

The company further said that it would scale down its operations globally—the management plans on shutting down its operations in Southern parts of Africa and Lesotho. The company’s cultivation facility in Colombia would also be shut down while the company would shift its business model to an asset-light one, wherein the local suppliers are leveraged for raw materials. In the US, the company will close down its farming activities in Springfield, New York.

The company might have chances of recovery. The company recently appointed David Klein as the new CEO, whose primary focus lies in improving the company’s liquidity as well as the cost structure. The scaling down in operations would help the company focus on the domestic market. The company plans to more efficient in terms of the production process in Colombia. The changes announced last month is unlikely to have any drastic or even significant impact (this year or in the near future) on Canopy’s figure of growth and sales as the international presence and sales of medical marijuana internationally by the company (excluding Germany) remains minimal. This means that the changes would reduce costs, improving the bottom line. This could, in turn, help the company’s stock to gain traction.

The company had reported cash and cash equivalents of 1.6 billion Canadian dollars as of December 31. The company also has baking of a giant partner, that is, Constellation Brands. With the demand for cannabis still on the rise despite the pandemic, Canopy Growth stock could be considered to be a safer bet.

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Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.