The Canadian cannabis market has been a disappointment for many since recreational legalization officially took effect in October 2018. Initially, the cannabis sector was plagued by supply issues that quickly transitioned to a supply glut. Meanwhile, the black market has maintained a solid foothold in the market, albeit a progressively declining one.
Canopy Growth (TSX:WEED) has been one of the largest cannabis producers in Canada since the beginning of legalization. This Smiths Falls-based company is engaged in the production, distribution, and sale of cannabis and hemp-based products for recreational and medical purposes primarily in Canada, the United States, and Germany. Its shares have plunged 42% in 2023 as of close on April 20. The stock is down 74% year over year.
This company released its third quarter fiscal 2023 earnings on February 9. Canopy Growth is still fighting to achieve profitability. It announced a cost reduction program of approximately $140-$160 million that it hopes will be realized over the next 12 months. The company posted net revenue of $101 million in the third quarter of fiscal 2023 – down 28% compared to the third quarter of fiscal 2022. However, adjusted EBITDA increased $21 million year-over-year to $88 million.
Relatives Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Canopy Growth last had an RSI of 21, which puts this cannabis stock deep in technically oversold territory. Meanwhile, the stock is on track for strong revenue growth going forward. This top cannabis stock remains a big gamble in the spring of 2023.
