Cannabis stocks dive after Canopy Growth, Tilray report losses

Bruce Linton, Canopy Growth CEO, sold the first legal recreational cannabis in Canada at the stroke of midnight on Wednesday, Oct. 17 at Tweed in St. John's, Newfoundland. He said that while he is ready for the demand, there's no business model to copy.

The shares of two of the Canada’ top cannabis producers, Canopy Growth and Tilray, took a hit in early market trading on Wednesday after posting quarterly net losses. Canopy Growth’s U.S.-listed shares were down around six per cent a few minutes after markets opened at 9:30 a.m. Eastern. Tilray was down around 4.5 per cent.

On Wednesday, Smith Falls, Ont.-based Canopy Growth reported a loss of $330.6 million in its most recent quarter as it ramped up spending ahead of the legalization of recreational marijuana in Canada. The company says the loss amounted to $1.52 per share compared with a loss of $1.6 million or a penny per share a year ago.

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Revenue for the quarter ended Sept. 30 totalled $23.3 million, up from $17.6 million. The quarter included $700,000 in revenue from what Canopy said were test shipments to test supply chain systems ahead of the launch of recreational marijuana on Oct. 17. During the quarter, the company sold 2,197 kilograms and kilogram equivalents at an average sale price of $9.87 per gram, up from 2,020 kilograms and kilogram equivalents at an average price of $7.99 a year ago. Canopy says it had 84,400 active registered medical marijuana patients, up from 63,000 a year ago.

On Tuesday, B.C.-based Tilray reported an 85 per cent jump in quarterly revenue year-over-year to US$10 million, but a wider net loss during its third quarter.

The Nanaimo-based company posted a quarterly net loss of US$18.7 million during the three months ended Sept. 30, compared to US$1.8 million in the third quarter of 2017. Analysts had expected revenues of US$10.1 million and a loss of US$12.7 million, according to Thomson Reuters Eikon.

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The marijuana producer, which has a market capitalization of roughly US$10.2 billion, says the higher net loss was due to higher operating expenses related to growth and international expansion. Tilray says other factors driving up its net loss include costs related to financing and its initial public offering on the Nasdaq in July.

The company’s average net selling price was US$6.21 per gram in the quarter, down from US$7.53 during the same period a year ago, primarily due to an increase in bulk sales as a percentage of total revenue.

— With a file from Erica Alini, Global News

© 2018 The Canadian Press

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