Canopy Growth: Bruce Linton strikes out, writedowns on deck
Canopy Growth Corporation, formerly Tweed Marijuana Inc., is a cannabis company based in Smiths Falls, Ontario. Tweed was founded by Bruce Linton and Chuck Rifici in 2013, and renamed Canopy Growth Corporation in 2015. Some reliable sources also list Mark Zekulin as a co-founder; I became the sole CEO of the company in July 2019 after Linton was ousted from the company.
It is considered that the management team at Canopy never seemed the caliber of people to take the company, let alone the industry, to long-term success. They favored the promotion on operations.
In fact, it is considered that Canopy was a company that worked well in the promotion phase, driven by Linton promising the moon at all times.
However, it has been said that now with the transition of the market to a point where operations are important, Canopy is exposed.
Now, with the co-CEOs on their way out after the CFO was replaced in June, they have questioned why Constellation gave billions to a management team whose full vision completely turned around.
A real problem
It is important to express that there is a real problem. And in that case, if Bruce was the problem, he would have been the only one who would leave. However, it is clear that Constellation is signaling a plan in order to start over.
Coupled with this, it has been said that investors have a real problem. And they are stuck with a corporate investor who runs the program with no experience in growing cannabis. In fact, it is also believed that the best case for investors is a blocked stock as a lagged market with write-downs risk hovering over the shares.
That being the case, in the worst case, the future write-downs kill investor confidence, narrowing the huge multiple premium to the group. In this way, the Canopy stock has a 30% -40% disadvantage if the company negotiates with the multiple of the market, $ 25 in the USA. UU (NYSE: CGC) or C $ 32 (TSE: WEED) in Canada.
In conclusion, it could be said that investors should be very cautious in having a company that is likely to seek large repayments in the very near future.
Source: Scott Willis | Grizzle