Canopy Growth Share Price Forecast February 2022 – Time to Buy CGC?
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Shares of cannabis producer Canopy Growth (NASDAQ: CGC) are in the green today, after closing at $8.73 as of February 15th (19:59 EST). Canopy Growth shares increased by more than 17% to reach $9.61 at one point, marking their highest level since it debuted. The company released its earnings report last week, which many believe could serve as a catalyst for a potential turnaround for the struggling business.
Canopy Growth – Technical Analysis
Canopy Growth’s financial statement indicates a market cap of $3.437 billion with total assets worth $4.988 billion. Revenue for 2020 was at $434.94 million with a profit margin of -319.20% compared to $280.16 million in 2019.
Oscillators such as Relative Strength Index (14)(53.63), Stochastic %K (14, 3, 3)(71.43), Commodity Channel Index (20)(101.29), Average Directional Index (14)(19.09) and Awesome Oscillator(0.55) are neutral. Moving averages such as Exponential Moving Average (10)(8.42 ), Simple Moving Average (10)(8.31), Exponential Moving Average (20)(8.29), Simple Moving Average (20)(7.91) and Exponential Moving Average (30)(8.43) are indicating a buy action.
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Recent Developments
Canopy Growth is a Cannabis-based company founded by Bruce Linton and Chuck Rifici. It became the world’s largest cannabis company, based on the value of all shares, or market capitalization by April 2019. The same year saw Constellation Brands, which then held four of the seven Canopy board seats and controlled nearly 40% of the firm, expressing dissatisfaction with its financial results. This resulted in the ousting of Linton from all his roles with the company. The company appointed a new CEO David Klein, who was previously executive vice president and CFO at Constellation Brands.
Init’s latest reported earnings, the company achieved sales worth 141 million Canadian dollars for the period ending Dec. 31, which was a 7% improvement from the previous period. It only reported modest improvements from a year ago with an EBITDA loss of CA$67.4 million, which was largely unchanged from the CA$68.4 million loss a year earlier. The company has brought down its expenses by 19%. However, the price compressions and declining gross margin will offset the majority of those gains.
Canopy Growth along with Cannabis stocks in general, were up last week. The catalyst behind this was Senate Majority Leader Chuck Schumer’s bill for reforming marijuana making it’s way back into the mainstream. The company is also much more aggressive when it comes to its peers in Canada in securing deals in the U.S. that it can execute once legalization happens. This includes a deal with edibles maker Wana Brands and a pending transaction with multi-state operator Acreage Holdings.
Should You Buy CGC Shares?
Investors must realize that compared to any other Canadian pot stock, Canopy Growth has a lot to gain from legalization. So it stands to reason that Canopy Growth shares would also jump the most on any news relating to the legalization. Thus, an increase in share price should not encourage investors too much.
Canopy Growth’s earnings remain uninspiring. The legalization of cannabis isn’t imminent despite all the talk and optimism about it. Investors expecting to hold on to the shares should expect a volatile roller-coaster ride until legalization in the U.S. takes place. Only then can the company be considered a good investment.
However, you will be disappointed if you are expecting some quick gains and hoping that what happened last week will somehow lead to strong returns this year. Considering this now is not the time to buy Canopy Growth shares.
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