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Is Canopy Growth Stock Price Selloff Presenting a Buying Opportunity?

Canopy Growth Stock

Canopy Growth (NYSE: CGC) stock price lost 43% of value in the last three months alone. The stock is currently trading at the lowest level in one year.

Higher valuations and rising competition are impacting Canopy Growth stock price performance. In addition, lower than expected financial numbers have also been adding to stock price selloff.

CGC Canopy Growth Corporation daily Stock Chart

Some market pundits believe the decline in Canopy Growth stock price is presenting a buying opportunity.

GMP Securities analyst Mr. Macdonell has set a price target of C$45 for CGC stock, saying we remain positive on the company since it is well-positioned for “cannabis 2.0” which will feature new formats like edibles.

Although the company had missed revenue and earnings expectations for the first quarter, its revenues soared sharply from previous periods. Its net revenue of $90 million jumped 249% from the previous year. Its Adjusted EBITDA increased close to C$5M versus the prior quarter. Canopy Growth harvested 40,960 kilograms in the first quarter, higher almost 183% from the previous quarter.

Fiscal 2020 is going to be another exciting time for the cannabis industry as we close in on the launch of new product formats.  Our recent harvests are proof that our focus on operational excellence is working, said Mark Zekulin, CEO, Canopy Growth.

With the strategy of creating a dominating position in the Cannabis industry, the company has been aggressively expanding its harvesting potential.

It has harvested 40,960 kilograms in the first quarter this year. This clearly demonstrates its ability to scale production. The overall production includes 70% of ‘high-THC’ strains of cannabis – which sets it for meeting the burgeoning demand for high-THC products in retail.

Canopy Growth stock price is likely to receive support from its aggressive harvesting growth strategy in the emerging cannabis industry. Its share price growth also depends on external factors such as regulations in developed markets.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.