May 20, 2022

Employees work at the Canopy Growth facility in Smith Falls, Ontario, Canada on December 19, 2017.

Chris Roussakis | Bloomberg | Getty Images

Canopy Growth stocks rebounded Tuesday after the Canadian cannabis company announced it would be profitable through the second half of 2022.

“We are building a track record in our core markets while accelerating our US growth strategy with the momentum behind the promising US cannabis reform,” said David Klein, CEO of Canopy Growth, in a statement Tuesday.

Canopy stock closed Tuesday, up 11.9% at $ 49.09. The stock rose 149% over the past year, increasing its market value to over $ 17.1 billion. In Tuesday’s trading, the stock rose to a 52-week high of $ 50.92.

Previously, the company reported that third-quarter sales were up 23% year over year to Canadian $ 153 million ($ 120 million), driven by higher sales of recreational products in Canada and medicinal cannabis in international markets.

Canopy’s loss rose from a loss of $ 109.6 million, or $ 26 cents per share, a year ago to $ 829 million ($ 653 million), or $ 2.43 per share.

The company has tried to improve its profitability by cutting costs and controlling costs. These efforts, coupled with the expected surge in demand, should help turn it into a profit later next year.

Canopy expects costs to be cut by as much as $ 200 million over the next 12 to 18 months.

With the new Biden administration, Canopy Growth is optimistic about the prospect of legalizing U.S. cannabis and expects it to hit the market this year.

“We expect that this legislation will include major reforms to ensure restorative justice, protect public health and introduce responsible taxes while the cannabis ban comes to an end,” Klein said in a call for tenders.

According to Owen Bennett, a Jefferies Group equity analyst, Canopy Growth continues to position itself as the leading US cannabis company for short-term legislative reform after acquiring Acreage and acquiring a stake in TerraAscend.

Bennett also cited the Martha Stewart CBD product line as another factor, which already exceeds 94% of all US CBD brands just four months after its market launch. The brand recently added CBD pet products.

Canopy Growth has set its mid-term financial goals and estimates that average annual revenue will increase between 40% and 50% between fiscal years 2022 and 2024. In addition, the company expects positive operating cash flow for fiscal year 2023 and positive free cash flow for fiscal year 2024.