Buried in the fine print of Canopy Growth Corp.’s latest quarterly update was a line about its “ability to continue as a going concern,” as it posted a wider loss.
This comes after Constellation Brands STZ invested a total of $4 billion starting in 2018 in a company that now has a market cap of about $300 million. Constellation has said it does not plan to provide any more capital to Canopy Growth but it will retain its ownership stake in the company. On Thursday, the company posted a fiscal fourth-quarter net loss of C$648 million, or C$1.28 a share, compared to a year-ago loss of C$582.5 million, or C$1.48 a share, along with disclosing a probe by the Securities and Exchange Commission into a misstated revenue for its BioSteel sports-drink.
“The vast bulk of any Canopy Growth value is to come from its U.S. assets,” Bennett said. “The new structure they’re pursuing makes sense, therefore, and is arguably critical.” The company is taking steps to reduce its operating cash burn including cost reductions at BioSteel, closing and selling facilities as part of its “asset light” approach.