Investors in the cannabis industry have been on a roller-coaster since last year with cannabis stocks burning significant investor wealth. One cannabis operator that has fallen from grace to grass is Canopy Growth Corp (NYSE:CGC).Once a darling in the industry the cannabis stock plunged from its all-time highs in October 2018 and has since struggled to get up.
Canopy stock has been battered
When Canada legalized cannabis the company saw its stock surge $9,364% to its highest stock price after its IPO. Initially, the company focused on medical marijuana but following the legalization of recreational use the company expanded and currently medical cannabis accounts for only 70% of its sales.
However, the impressive start came into a halt and wit the market crash the stock plunged 70% from its highs. The company embarked on the expansion of its infrastructure as well as R&D and this raised concerns among investors on when the company will turn a profit from the reinvestment. Unfortunately, after the market crash, things have turned worse.
Recently the company announced massive cuts that sent shares even further down. The company took write-downs and reduced its workforce and a month later it has said that it is closing some of its facilities, exiting operations in some jurisdictions as well as laying off another 85 full-time workers.
What next for Canopy Growth
Canopy Growth was one of the highly regarded operators in the industry but that sentiment has now died. The company wanted to take advantage of legalization in other countries and made investments there but the COVID-19 has put hopes of legalization back. Its global strategy suffered a setback and even its medical marijuana earnings have reduced because of cost-cutting.
However, there is optimism in its expansion to produce cannabis in emerging markets like Colombia and Lesotho which will lower production costs. Also, its partnership with Constellation Brands (NYSE:STZ) could help it navigate the current situation or even acquire it.