Written by: Jay Yi, MBA; Edited by: Chris Thompson, CFA, MBA, P.Eng
eResearch | Canada legalized cannabis one year ago with a vision to lead the cannabis industry globally as large amounts of investment capital flowed into the country. Unfortunately, cannabis companies saw their stock prices fall quarter after quarter. The top nine cannabis companies by market capitalization are currently on average half the value of what they were one year ago.
Horizons Marijuana Life Sciences
Horizons Marijuana Life Sciences ETF (TSX: HMMJ), the first cannabis ETF, has fallen almost 60% in share price this past year due to several factors including (1) missed earnings from constituent companies, (2) vaping-related health concerns, and (3) miscarried government regulations. As investors lost confidence, multiple cannabis deals in 2019 have broken apart as companies fail to execute in an uncertain market environment.
Tilray Inc.
Tilray Inc. (NASDAQ: TLRY; LSE: 0Z6Y; DB: 2HQ) experienced the largest drop in market capitalization since legalization as it has lost more than C$14 billion in value, with Aurora Cannabis Inc. (TSX: ACB; NYSE: ACB; LSE: 0UJG; DB: 21P) at second with a loss of C$8.2 billion in value. Canopy Growth Corporation (NYSE: CGC; TSX: WEED; LSE: 0UO9; DB:11L1), the largest cannabis company in the world by market cap, lost C$6.1 billion in value since legalization.
Canopy, The World’s Largest Cannabis Company
Canopy stock price has dropped over 60% to C$25.90, from its 52 week high. Last year, Canopy was the highlight for the cannabis industry after Constellation Brands Inc. (NYSE: STZ) invested C$5 billion to support strategic growth. However, several setbacks including the termination of its CEO, Bruce Linton, and lack of profitability has reflected in poor stock performance.
Bruce Linton was terminated from his CEO position after Constellation expressed disappointment with Canopy incurring C$670 million in losses for F2019.
As Canopy operates without a leader, its stock price has continued to struggle in F2020, reporting a 4% decrease in revenue in FQ1/2020 with a continued net loss of C$1.3 billion. In addition, gross margin decreased to 15% compared with 43% year-over-year due to changes in its fair value of biological assets, raising concerns for sustainability of future cash flow growth.
Unlike technology companies that can afford to lose money early to scale quickly later through their online platforms, cannabis companies generate revenue through growing and making consumable products, which brings more concern for their consistently growing losses.
As cannabis companies are expected to start releasing earnings for calendar Q3/2019, it will be interesting to see if these companies continue to bleed in stock price.
Will Canopy continue to decrease in stock price and lose its place as the world’s largest cannabis company?
| Name | Ticker | Mkt Cap (C$M) |
2018-10-17 | 2019-10-17 | % Price Change |
Mkt Cap Change (C$M) |
| Canopy Growth | TSX:WEED | $9,009.72 | $65.76 | $27.31 | -58% | -$6,121.59 |
| Aurora Cannabis | TSX:ACB | $4,824.90 | $13.57 | $5.11 | -62% | -$8,215.36 |
| Cronos Group | TSX:CRON | $3,637.16 | $13.95 | $11.60 | -17% | $1,144.29 |
| Tilray, Inc. | NASDAQ:TLRY | US$2,130.90 | US$148.25 | US$22.49 | -85% | -US$11,677.71 |
| Green Thumb | CNSX:GTII | $2,331.75 | $22.93 | $12.50 | -45% | -$1,117.12 |
| Aphria Inc. | TSX:APHA | $1,713.11 | $19.40 | $6.45 | -67% | -$3,132.28 |
| Trulieve Cannabis | CNSX:TRUL | $1,478.64 | $16.90 | $13.51 | -20% | -$377.16 |
| HEXO Corp. | TSX:HEXO | $737.64 | $7.74 | $3.81 | -51% | -$777.94 |
| OrganiGram | TSX:OGI | $696.56 | $7.34 | $4.85 | -34% | -$241.84 |
| MediPharm Labs | TSX:LABS | $602.26 | $2.36 | $4.35 | 84% | $373.65 |
| Neptune Wellness | TSX: NEPT | $413.35 | $5.72 | $4.65 | -19% | -$43.03 |
| Valens GroWorks | TSXV:VGW | $368.29 | $1.95 | $3.38 | 73% | $190.13 |
| iAnthus Capital | CNSX:IAN | $353.46 | $7.64 | $2.02 | -74% | -$215.67 |
| Origin House | CNSX:OH | $313.16 | $7.84 | $6.95 | -11% | -$128.38 |
| Canopy Rivers | TSX:RIV | $309.57 | $5.35 | $1.83 | -66% | -$606.67 |
| TGOD | TSX:TGOD | $311.32 | $5.73 | $1.39 | -76% | -$1,209.66 |
| MedMen | CNSX:MMEN | $295.07 | $8.95 | $1.35 | -85% | -$429.13 |
| 4Front Ventures Corp. | CNSX:FFNT | $278.36 | $0.64 | $0.57 | -11% | $160.78 |
| Supreme Cannabis | TSX:FIRE | $247.83 | $2.02 | $0.92 | -54% | -$314.92 |
| Planet 13 Holdings Inc. | CNSX:PLTH | $245.95 | $2.63 | $2.16 | -18% | -$62.40 |
Source: S&P Capital IQ
Canopy Growth Corp. (NYSE: CGC; TSX: WEED; LSE: 0UO9; DB:11L1)
- Headquartered in Ontario, Canada, Canopy Growth Corp. is the world’s largest cannabis company, based on market capitalization.
- Canopy was the first company to export cannabis to Germany, the first to make a partnership with a global beverage company, and the first to have an agreement to acquire a U.S.-based cannabis company.
- Canopy is currently trading at C$25.90 per share with a C$9.0 billion market capitalization.
Aurora Cannabis Inc. (TSX: ACB; NYSE: ACB; LSE: 0UJG; DB: 21P)
- Headquartered in Edmonton, Canada, Aurora is a Canadian licensed cannabis company that is the second-largest cannabis company in the world by market capitalization.
- It currently has eight licensed production facilities, five sales licenses, and operations in 24 countries.
- Aurora is currently trading at C$4.69 per share with a C$4.8 billion market capitalization.
Tilray Inc. (NASDAQ: TLRY; LSE: 0Z6Y; DB: 2HQ)
- Headquartered in B.C., Canada, Tilray is a Canadian cannabis producer who is incorporated in the U.S. with operations in Australia, New Zealand, Germany, Portugal, and Latin America.
- Tilray is currently trading at US$21.62 per share with a US$2.1 billion market capitalization.
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