Canopy Growth (NASDAQ:CGC) (TSE:WEED) shares jumped 22.15% yesterday and are up by another 7% in the pre-market session today following U.S. President Joe Biden’s announcement that thousands of people convicted for “simple possession of marijuana” will be pardoned.
Based in Canada, Canopy Growth Corp. engages in the production and sale of medical cannabis. The company offers products, including oils and concentrates, soft gel capsules, and hemp.
David Culver, VP of government relations at Canopy, stated, “Today represents action from the Administration that we have been waiting for – an acknowledgment that cannabis prohibition has failed and that too many lives have been significantly impacted as a result.”
While the stock rallied on the favorable news, let’s take a look at the concerns surrounding the Canopy Growth stock.
Recent Concerns at Canopy Growth
Last week, Canopy Growth announced the sale of its Canadian brick-and-mortar stores (Tweed and Tokyo Smoke stores) for an undisclosed amount. The transaction will help streamline the company’s Canadian operations and also lead to incremental cost savings.
On the downside, Constellation Brands (NYSE:STZ), one of the major owners of Canopy Growth, holding 36% of Canopy’s outstanding shares, disclosed in its earnings release yesterday that it has marked a $1 billion write-down with respect to its stake in the company.
Is CGC a Good Stock to Buy?
On TipRanks, the stock has a Moderate Sell consensus rating based on one Buy, two Holds, and five Sells. Canopy Growth stock’s average price target of $2.27 implies 39.47% downside potential from current levels.
CGC stock has a negative signal from hedge fund managers, who sold 41.4K shares last quarter. Further, the stock has an Underperform Smart Score of 2 out of 10.
Conclusion
Canopy growth stock lost almost three-fourths of its market capitalization despite its rally yesterday.
Currently trading at $3.75, the stock is far away from its all-time highs of more than $50. Investors have remained bearish on the stock for a long time. They will get more insights into the company’s performance in its Q2 results slated to release on November 9.
