Last week was a rough one for cannabis stocks.
Canopy Growth Corp., seen as a leading trendsetter for the sector, posted disappointing earnings results on Thursday. They fell to a quarterly loss of 31 cents per share, far below the industry projection of 22 cents per share. While revenue soared, net loss and operating loss both widened substantially. And Wall Street was not thrilled. The company’s shares fell 8.1 percent over the day on Friday.
This morning, it seemed like those losses for the sector would continue, and even Canopy insiders feared a sustained loss.
“We’re still seeing the Canopy report spill over into the sector as people work their way through the numbers,” said Korey Bauer, portfolio manager of the Cannabis Growth mutual fund. “There was some disappointment about how much they’re spending and international is not as impressive as hoped, but time will tell. We have the edibles rollout in Canada coming in the (calendar) fourth quarter and Canopy is expecting that to be a big revenue provider.”
Stocks on the Rise
But then, as quickly as they sank, stocks began to rise. Canopy is now up above its $40.32 per share opening. Other cannabis stocks like Aurora and Cronos group have rallied, too, although Tilray is still lagging behind.
There’s little obvious explanation for the sudden turnaround. Some of it is certainly due to the general strength in the market today, as most indicators remain near all-time highs.
But on the whole, it’s probably an indication that consumer sentiment toward the cannabis sector will never falter for long. That’s part of why so many experts, like Teeka Tiwari, think it’s the next major wealth changing opportunity. Confidence is high in the growing industry, and even bad earnings reports can only quiet it for a little while.