Canopy Growth (TSX:WEED) fell to 52-week lows yet again this week, as Canopy Growth stock announced its most recent earnings. Shares have plunged 86% in the last year with no end in sight.
BioSteel mess
Canopy Growth stock announced further staff cuts in its latest earnings report, with specific attention placed on its BioSteel business. The company announced it would laying off several members of the BioSteel leadership team, and are currently in review of BioSteel to see if there are “legal remedies” open to the cannabis producer.
The remarks were made after Canopy Growth stock announced it would refile three of its past quarterly financial statements because of “misstatements” linked to BioSteel. Sales from the brand “should no longer be relied upon” the company said after going over its financial results for the financial year.
New details came out during the quarter and full-year results, providing investors with more reasons to apparently drop the stock.
More losses
Canopy Growth stock announced net loss in the fourth quarter came to $648 million, a $59 million increase on losses from the year before. Much of the loss, management stated, came from asset impairment and restructuring costs totaling around $164 million.
As for BioSteel, the corrected numbers saw a decrease of $10 million in net revenue for the 2022 year. The correction in numbers led to a $10 million decrease in net revenue for the year, and $14 million decrease in net revenue for the last nine months ending on Dec. 31, 2022.
Its other revenue sources from cannabis also came in lower. Net revenue for Canopy Growth stock was down 14% to $88 million, with its adjusted loss reaching $96 million. This was an improvement of $36 million from its negative adjusted earnings before interest, taxes, depreciation, and amortization last year.
Where Canopy Growth stock is headed next
It wasn’t all bad news, with Canopy Growth stock still seeing 101% increase in revenue for BioSteel. Plus, cost savings came in from the departure of 800 workers, or about 35% of its workforce back in February.
Still, cost savings from cuts isn’t what investors want to see. It also led to analysts cutting their price targets for the stock, with some pushing down its target price to under $1.
It’s certainly a long way down from the all-time highs reached by the cannabis stock before legalization in Canada. And, of course, investors want to know if it can turn things around.
As for now, that doesn’t look likely in at least the next year or so. Canopy Growth stock seems to take cuts as its main source of savings for now. Until it can reach a profit, investors are likely to continue seeing drops in share price for the foreseeable future. Drops so large, it may soon be kicked off the TSX.
Meanwhile, federal legalization of cannabis in the United States also doesn’t look likely. Not with an election coming up in the near future. So, if you’re hoping for a sudden climb in Canopy Growth stock, don’t hold your breath.
