(Reuters) - Canopy Growth Corp (TO:WEED) (N:CGC) on Friday reported a bigger-than-expected quarterly loss as its recreational cannabis business lost market share due to delayed product launches.
The company also withdrew its target of becoming EBITDA positive by the end of fiscal 2022 due to uncertainties related to the coronavirus crisis, sending its U.S.-listed shares down over 20% and dragging down other weed stocks.
The COVID-19 pandemic, which has upended financial markets, was expected to give cannabis companies a boost as customers were seen stockpiling pot brownies and other products to cope with lockdowns.
But delays in Canopy's launch of '2.0 products', which include the highly sought brownies, beverages and vapes, hit the company's recreational revenue in the fourth quarter and pulled down overall revenue by 13% compared with the third quarter.
Added to that, the company had to temporarily shut most of its retail stores in March and is in the middle of a restructuring program that has included divestitures and layoffs in hopes of becoming profitable.
Canopy's recreational market share declined from the low 20s to high teens, Chief Financial Officer Mike Lee told analysts.
"Simply put, we missed opportunities," he said.
Jefferies analysts said Canopy has 'much more work to do' than they had thought earlier and called it worrying that executives spoke of a need to 'understand what customers want'.
"Probably the worst thing to hear from a market share leader," the analysts wrote in a note.
Net loss attributable to Canopy widened to C$1.30 billion ($946.21 million) in the quarter ended March 31 due to impairment and restructuring-related charges of C$743 million.
Excluding charges, Canopy's C$1.55 per share loss was much bigger than analysts' estimate of C$0.59 per share, according to Refinitiv data.
($1 = C$1.37)