Monday was a big day for the world’s largest cannabis company, having made one of the most anticipated announcements so far this year. Canopy Growth (NYSE: CGC) officially announced who would be signing on as the firm’s new CEO. David Klein, who used to be the CFO at Constellation Brands (NYSE: STZ) – one of Canopy’s top investors – will now be at the head of the company.
This is a pretty big piece of news, as cannabis investors have long been speculating who would be taking the vacant spot in Canopy’s executive team. Earlier this year, Canopy Growth’s iconic co-founder and CEO Bruce Linton was fired from his position due to the company’s ongoing financial losses, with a major $1 billion loss following in its Q2 2019 financial results. While interim CEO Mark Zekulin stepped up to fill in the position, investors have been wondering when the company will announce its replacement, and who it will be.
The significance of David Klein’s appointment is that he used to be the CFO for Constellation Brands, the same company that initially invested over $4 billion into Canopy to help develop CBD-beverages. This announcement only further serves to connect the two companies, reinforcing Constellation Brand’s stake and ability to steer the overall direction of the cannabis company.
“Canopy Growth sits at the forefront of one of the most exciting new market opportunities in our lifetime,” said Klein in an official statement on Monday. “Thanks to the efforts of Mark and the entire team at Canopy Growth, no company is better positioned to win in the emerging cannabis market.”
Large-cap cannabis stocks such as Canopy have been doing very poorly over the past few months. While the first quarter of the year saw some impressive gains, these were just returning some of the losses seen from Q4 2018. The rest of the year has seen the cannabis market steadily decline, with Canopy losing half of its market value over the past six months. Now with a new CEO leading Canopy, expectations are high that the company will begin to stage a turnaround in the months to come.
In response to the news, however, shares of Canopy Growth shot up by 13% over the course of the day. At this point, it’s uncertain how much lower cannabis stocks will continue to fall. Many analysts have argued that pot stocks are now veering on becoming potential value investments, and should they fall any lower, they may easily become undervalued. What does seem to be clear, however, is that Canada’s 2.0 legalization didn’t have as much of a positive effect on pot stocks as some had initially hoped for.
Canopy Growth Company Profile
Canopy Growth, headquartered in Smiths Falls, Canada, cultivates and sells medicinal and recreational cannabis, and hemp, through a portfolio of brands that include Tweed, Spectrum Therapeutics, and CraftGrow. Although it primarily operates in Canada, Canopy has distribution and production licenses in more than a dozen countries to drive expansion in global medical cannabis and also holds an option to acquire Acreage Holdings upon U.S. federal cannabis legalization. – Warrior Trading News