Canopy Growth Corp (TSX:WEED) Earnings Report: Is it Headed for a Crash?

Canopy Growth Corp (TSX:WEED)(NYSE:CGC) is on course to make true its vision of becoming the number one cannabis company in the world.

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Weeks have passed since Canopy Growth (TSX:WEED)(NYSE:CGC) reported its latest quarterly earnings. Yet the market buzz about the stock lingers. Despite the wider loss from a year ago, the excitement over the income possibilities remains strong as ever.

Investors are not letting go and continue to regard Canopy Growth as the top draw in the cannabis space. The healthy sales numbers are truly reassuring. But perhaps the brand name recognition is what’s keeping the company alive in the minds of investors for the moment. Presumably, a string of victories is highly anticipated.

Hope springs eternal

Based on the company’s unaudited financial statements, top-line revenue in Q3 2018 jumped 350.24% to $97.7 million with a corresponding net income of $74.9 million. However, on a year-to-date basis, Canopy Growth incurred losses amounting to $346.7 million.

The figure is disappointing, to say the least, but the greater majority of stock market players are keeping their fingers crossed. Canopy Growth sunk deep and ended 2018 at $36.61. But hope springs eternal, and investors who stuck it out last year have stopped fidgeting.

A day before the month of February closes, WEED finished at $60.17, which represents a +64.35% increase from the bottom of the pit. The period of redemption is at hand. The growth prospects that have been promised were rekindled.

Just like the multitude of Canopy Growth followers, are you longing for something extraordinary to happen this year? Do you see a great tide developing? The company and its management team are equally enthusiastic about the future. Realizing the vision of becoming the number one cannabis company is as real as it can get.

Brace for a phenomenal explosion

There’s fresh cause for optimism in the cannabis industry. First and foremost is that cannabis will find its rightful place in the mainstream. Gone are the days of clandestine operations. As the industry moves forward, consolidation becomes imminent.

Big players will gobble up the smaller companies. You can expect the larger entities to improve operational efficiencies and turn in higher profits. The pace will be fast and furious. Meanwhile, Canopy Growth will rack up the sales of adult-use marijuana. The “true” impact of cannabis legalization will be reflected in the quarters ahead.

Canopy Growth is determined to boost its 18% market share. The company is out to prove its ability to spawn sequential growth. In the U.S. market alone, sales of marijuana are seen to top $80 billion by 2030. This gives you a compelling reason to give this Canadian grower serious consideration.

The clear favourite

Robust growth is expected with more U.S. states favouring legalization while sustained growth in North America is clear as day. The adult use sales could hover in the vicinity of $3.1 billion as retail access spreads.

Canopy Growth is slowly plugging in the loopholes and rectifying the supply shortages. The projected $239 million sales in fiscal 2019 could exponentially grow to $778 million by 2020. Despite previous shortcomings, Canopy Growth is the clear favourite if you seek large gains.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

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