Canopy Growth Corporation (NASDAQ: CGC) saw its stock slide Friday after the Canadian cannabis company posted weaker-than-expected second-quarter fiscal 2027 results. The headline numbers were not pretty: a loss of 7 cents per share versus Wall Street's expected 3-cent loss, and revenue of $58.149 million (81.4 million Canadian dollars) that fell short of the $59.12 million analyst estimate.
The net loss widened by 35.7 million Canadian dollars, largely because of 35.8 million Canadian dollars in fair value charges tied to Canopy USA assets. That is the kind of accounting noise that can make a quarter look worse than the underlying business, but investors still hit the sell button.
Cannabis Sales Grow, But Storz & Bickel Stumbles
Not everything was bad. Cannabis net revenue climbed 30% to 66.2 million Canadian dollars, driving overall growth. The problem child was Storz & Bickel, the vaporizer business, where revenue fell 4% to 15.1 million Canadian dollars. Canopy blamed weaker consumer spending in certain markets, a familiar refrain across the cannabis industry these days.
On the profitability front, Canopy reported an adjusted EBITDA loss of 2.9 million Canadian dollars, a 6% improvement from a year earlier. Higher cannabis revenue and cost savings helped, though lower medical cannabis reimbursement rates under Canada's Veterans Affairs program partly offset those gains. Adjusted gross margin slipped to 31% from 33% a year earlier. The latest figure excludes 2.1 million Canadian dollars in inventory step-up charges related to the MTL Cannabis acquisition.
International Markets Shine
CFO Tom Stewart said the company continues to make progress toward profitability, putting it within reach of positive adjusted EBITDA during fiscal 2027. That is the goal Canopy has been chasing, and it is focusing on cost controls and operational improvements to get there.
The international story is where things get interesting. International net revenue surged 141%, driven by strong medical cannabis sales in Germany and Poland. Canopy also entered the U.K. market, expanded its Australian product portfolio and strengthened its European supply chain. Management expects improvements in cultivation capabilities to support further growth.
So why the 9% drop? The market is forward-looking, and a wider-than-expected loss combined with a revenue miss tends to overshadow operational wins. Canopy Growth shares were down 9.03% at $0.61 at the time of publication on Friday, according to market data. Trading volume reached 4.91 million shares, about 71.6% above the 100-day average of 2.86 million, signaling heightened activity and potential volatility in the micro-cap stock.
For investors, the quarter is a reminder that Canopy's path to profitability is still a work in progress. The cannabis segment is growing, international markets are booming, and adjusted EBITDA is improving. But the bottom line remains under pressure, and until the company delivers consistent profits, the stock may stay choppy.
