Canopy Growth (WEED) (CGC), which reported its fiscal 2019 fourth-quarter earnings results on June 20, largely disappointed the market, which led to a sell-off in its stock on June 21, when it fell nearly 7.6%. In the quarter, Canopy Growth’s sales rose nearly 13% sequentially, while its sales grew almost 191% year-over-year.
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Despite the growth in its revenue, Canopy Growth’s recreational cannabis kilograms and kilogram equivalents sold in the fourth quarter came in lower than in the previous quarter. The company sold a total of 7,693 kilograms of recreational products in the fourth quarter compared to 8,287 kilograms in the third quarter.
Canopy Growth’s recreational kilograms sold, which came in lower than in the previous quarter, cast a shadow of doubt on the potential of the recreational cannabis market. Expectations met reality for one of the biggest players in the cannabis industry when it came up short of expectations.
Looking past Canopy’s earnings
During the fourth quarter, supply constraints remained a challenge for Canopy Growth, especially in the medical channel. On its fourth-quarter earnings call, Canopy Growth said that the supply constraints had been resolved and that it expected its inventory of finished goods to increase by the second quarter of 2020.