Canopy Growth Corp (TSX:WEED) was one of the biggest TSX losers of 2025. Down 61.4% for the year, it dramatically underperformed the TSX, which finished the year in a massive bull market.
As we start off 2026, WEED stock is bordering on penny stock territory, trading at just $1.74. After such a massive sell-off, it’s natural for investors to wonder whether this stock has gotten beaten down too much. But has it? In this article, I will explore Canopy Growth’s poor 2025 performance and attempt to gauge whether it will continue into 2026.
Why Canopy fared poorly in 2025
There were several reasons why Canopy Growth did poorly in 2025.
First, the company’s earnings disappointed investors, with three earnings misses in four reported quarters.
Second, the company shrank, with revenue down 0.67% for the year and earnings deep in the red.
Third, the company’s balance sheet metrics stagnated, with cash, assets and equity changing little compared to the prior 12-month period.
Fourth and finally, Donald Trump’s widely anticipated executive order on cannabis disappointed investors, as it dealt only with medical cannabis, and did not legalize marijuana on the federal level.
For the reasons above, Canopy took a major beating in 2025.
Will the selling continue in 2026?
Having explored the reasons for Canopy’s 2025 sell-off, it’s time to gauge whether the selling will continue in 2025.
To cut a long story short, I think that there is a serious risk of Canopy continuing to sell off in 2026. At the same time, I do not think that the downside will likely be as severe this year as last year, or that the stock is a near-term zero.
As hinted at previously, Canopy’s finances have “stabilized” in many ways. Thanks to asset sales, the company is no longer losing money at the rapid rate it once was or burning through its cash pile. A story from 2023 reported that the company raised $150 million that year from asset sales. With most cannabis businesses losing money, these sales likely helped to stem Canopy’s losses, which came in at $386 million last year, down from the year before, and down massively from the massive $3.1 billion loss in 2021. Basically, Canopy Growth is getting leaner.
But still, note how far the company is from actually being profitable. Canopy’s $386 million dollar loss on $278 million in revenue, implies a negative net margin of 138%. It seems there are some asset write-downs occurring here, as losses greater than revenue aren’t normal. However, the company’s $-70.5 million in free cash flow (FCF) is also a deeply negative margin, suggesting that the cannabis producer will take many years to achieve positive earnings and cash flows.
It doesn’t look like Canopy is going to become profitable any time soon, which begs the question, “Should the stock be worth anything?” While we’ve seen that the company’s losses have been getting smaller, smaller losses is not the same thing as eventual profitability. With cannabis being a commodity in Canada and the U.S. market not set to open up soon, it seems possible that Canopy could continue losing money for the remainder of its existence. So, there’s a possibility that Canopy Growth will repeat its 2025 performance in 2026 – and no clear reason for the stock to rise.
I would not invest in Canopy Growth stock.
