Bruce Linton, ex-CEO of Canopy Growth (CGC) (WEED), recently had some tips to share with CGC’s new CEO. On December 9, Canopy announced the appointment of David Klein as its new CEO. Currently, Klein is Constellation Brands’ CFO. He also serves as the chair of CGC’s board. Let’s see what Linton had to say.
Bruce Linton’s tips for CGC’s new CEO
In an interview with BNN Bloomberg on December 9, Linton suggested that the new CEO should focus on long-term growth for the company rather than impressing shareholders in the short term.
Linton is confident that Klein is the right choice for Canopy Growth. However, he hopes Klein will sell his shares in Constellation so as to be completely committed to Canopy.
Linton added, “If you say I have a short-term ambition, I’d like to be profitable and report earnings per share across the whole company, with $5 billion in the bank or $3.5 [billion] as they now have, I think it’s squandering the purpose of raising the capital, which is to create a durable advantage, especially now when others don’t have cash.”
Additionally, BNN Bloomberg discussed Cantor Fitzgerald’s Pablo Zuanic’s views in an analyst note. The article said, “He sees a two-thirds probability of Constellation making a bid in the near-term to take full ownership of Canopy. He noted that Constellation CEO Bill Newlands is divesting assets to shift more attention to Canopy, ‘so an outright purchase … could be seen as a strategic shift.’” I discussed earlier how Constellation still holds warrants to buy Canopy Growth shares before they expire. Constellation suffered huge losses owing to Canopy’s declining profitability. I feel this decision could depend on Canopy’s performance in the upcoming quarters.
Furthermore, Constellation’s CFO being hired as Canopy’s CEO strengthens Constellation’s footing in CGC. I discussed how Constellation is strengthening its hold on CGC in Canopy Growth: Constellation’s Presence Can’t Be Ignored!
Bruce Linton’s views on Canopy Growth
It’s been six months since Linton left Canopy. On July 3, Canopy announced his exit. However, he said he was fired by the company and implied that it was Constellation’s decision. Constellation invested a significant amount in Canopy in 2018 and became its largest shareholder. Linton’s resignation came soon after.
However, his interest in Canopy’s business is still evident. Even after leaving the company, time and again Linton has shared his opinions on its operations. While Canopy was hunting for a new CEO, Linton took on three advisory roles. Recently, he also joined Vireo Health International as its executive chair.
Canopy Growth struggled this year
Canopy Growth, one of the top cannabis players, hasn’t been in its best shape this year. The company showed lowered profitability and missed its revenue targets. At the start of the year, analysts had expected it could touch 1 billion Canadian dollars in sales in fiscal 2020. However, considering its performance this year, they’ve revised their revenue estimates.
Now, analysts expect WEED to hit revenue of 407.4 million Canadian dollars in fiscal 2020. They expect it to hit 1 billion Canadian dollars in revenue in fiscal 2022. Chances are revenue earned from its Cannabis 2.0 expansion will help it hit that billion-dollar sales target.
Meanwhile, peer Aurora Cannabis could show revenue growth of 57.7% year-over-year to 391 million Canadian dollars in fiscal 2020. Cronos (CRON) could report 146.1 million Canadian dollars in revenue in fiscal 2020. Aphria (APHA), which has recently been shining under Irwin Simon’s leadership, could continue delivering positive results. It could report revenue of 593.4 million Canadian dollars in fiscal 2020. For more on the company’s performance under Simon’s leadership, read Has Irwin Simon Really Turned Aphria Around?
Canopy Growth stock gained after new CEO announcement
This week, Canopy Growth is up 8.5%. The stock rose after the company announced Klein’s appointment. Many analysts had mixed opinions about the new CEO. For more on their views, take a look at Why Canopy Growth’s New CEO Popped the Stock.
Year-to-date, CGC has lost 24.6%. Today as of 1:20 PM ET, it was up 2.6%. Meanwhile, ACB was up 3.9%, CRON was up 5.6%, and APHA was up 2.9%, respectively.
It’ll be interesting to see if and how Klein can help Canopy rise to greater heights. For further speculation, see CGC: How the Future Looks Under Its New CEO.
Meanwhile, check out 420 Investor Daily for more news on cannabis.