Canopy Growth Corporation (TSX: WEED) (NASDAQ:CGC) has been struggling over the years with competition and rising costs. But the company has been making serious efforts to reduce spending of late, and there to appear to be signs of progress, as is evident on its recent earnings numbers, which the cannabis company posted last week.
For the second quarter of fiscal 2024, the Canadian cannabis leader reported net revenue totaling just under $70 million, down 21% from the nearly $88 million it posted in the same period last year. But the positive is that while net revenue was down, Canopy Growth achieved a consolidated gross margin of 34% in Q2, compared to a negative margin in the same period last year. These figures reflect the effectiveness of the business transformation initiatives implemented since the beginning of fiscal 2023. The company’s adjusted EBITDA loss for the period was $11.9 million, which is far less than the $56.4 million loss Canopy Growth incurred in the prior-year period.
Another key highlight of Canopy Growth's recent performance is its successful reduction in debt. The company reduced its debt by $364 million this past quarter, marking a total debt reduction of approximately $1 billion since the beginning of fiscal year 2023.
Looking forward, Canopy Growth's management remains confident in achieving positive adjusted EBITDA across all of its business units by the end of fiscal 2024.
There’s still lots of work for the company to do, however. And with shares of Canopy Growth down 99% over the past five years, investors have reason to remain skeptical, as this remains a highly risky investment. Although there’s progress, investors should demand much more improvement before taking a chance on this troubled pot stock.
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