Out Fox The $treet

  Canopy Growth Corporation remains in a downward spiral as revenues plunge causing the Canadian cannabis company to start another restructuring. The company reported another horrible adjusted EBITDA loss. The stock is expensive compared to the cannabis space and should be sold at all price levels. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   The Canadian cannabis space continues to destroy shareholder wealth with the horrible results from industry leader  Canopy Growth Corporation  ( NASDAQ: CGC ). The company appears to have completely abandoned past plans and embarked on a  full restructuring with the Canadian business after years of destroying shareholder wealth. My  investment thesis  remains ultra Bearish on CGC stock until all restructurings end and the business returns to growth. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Plea...

  Canopy Growth makes another investment to enter the U.S. THC market when federally permissible. Wana Brands doesn't have a dominant market position in edibles to justify an aggressive move. The Canadian cannabis company will no longer have a net cash position following this deal and another quarter of operating losses. Even down at the lows, the stock still trades at a very expensive P/S multiple of 10x FY22 sales targets. Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our model portfolio.  Learn More » The Canadian cannabis LPs have consistently overspent on acquisitions and facilities to build empires. The latest deal by  Canopy Growth  ( CGC ) repeats on this history of aggressively attempting to buy growth when patience is needed. My  investment thesis  remains Bearish on the stock as the company makes another upfront payment to enter the U.S. market. Read the full article on Seeking Alpha. ...

Aurora Cannabis was in talks with Aphria on a merger of equals. The deal was estimated to generate C$200 million in synergies. The stocks could have had up to 50% upside on a merger. Over the last week,  Aurora Cannabis  ( ACB ) and  Aphria  ( APHA ) apparently discussed a  merger  with talks falling apart. A merger would've made the new entity into a global giant in the cannabis space after the Canadians have lost a ton of market leadership to U.S. firms in the last year. The synergies alone could make this a no brainer deal as Aurora Cannabis already had made an impressive transformation on costs making the  long-term investment thesis  on the stock more bullish. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Canopy Growth remains locked out of the major cannabis opportunities in the U.S. The Acreage deal is failing due to a lack of funding for the MSO. The company is still aggressively spending chasing smaller global opportunities in competitive markets. The stock is far overvalued here with a $6.5 billion valuation, over 16x FY21 sales estimates. On June 22,  Canopy Growth  ( CGC ) hosted a virtual investor meeting where the company discussed the future of cannabis in great detail. Whether intentional or not, the large Canadian cannabis company highlighted how the business model continues to waste too much money chasing the wrong markets. My  investment thesis  remains highly negative on the stock here with a market cap of nearly $6.5 billion and a long road to profits ahead. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. Update 6/25 Canopy Growth just modified the deal...

Aurora Cannabis is attempting to sell a facility once planned to produce 105,000 kg of cannabis. The major Canadian cannabis stocks don't trade at distressed levels. The stock has a legitimate reason for trading at $1 per share or 2x FY21 sales estimates. My constant warning on Aurora Cannabis ( ACB ) has been the risks associated with the stock still trading on elevated expectations. Despite large declines, most of the Canadian cannabis stocks don't trade at distressed levels. The stock could very easily hit the  $1 price target  prescribed by Piper Sandler last week. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Ontario finally plans to allow new cannabis retail stores, but the 2020 target is far below industry hopes. Cannabis 2.0 rollout appears disappointing in part due to lack of Ontario retail stores until mid-2020. The $3 billion stock price remains expensive with capital needs while facing more industry delays. Just when the Canadian cannabis sector appeared headed towards a couple of major catalysts in 2020, the sector has again been sabotaged by the governments inability to license new stores or break the illegal market. My  investment thesis  was looking for a chance to turn bullish on  Aurora Cannabis  ( ACB ), but the company remains in a tough financial situation until catalysts kick in later into 2020. Read the full article on Seeking Alpha.  Update - December 23, 2019 Not surprising with all of the Cannabis 2.0 delays, Aurora Cannabis hit a new low today. The stock needs to test the sub-$2 range and once coming out the other ...

Stocks to watch at week end: Lyft (LYFT) - the launch of Lyft Rentals isn't smart. The ridesharing service appears set to create another way to lose money. A prime benefit of the service is the door-to-door service where customers get a $20 ride credit each way. In essence, Lyft is giving away rides where the company already loses money in order to obtain what might only be a daily rental for $35. A lot of the service appears better for consumers, but the company is actually offering these ride credit discounts. Until Lyft can charge premium fees, avoid the stock. Canopy Growth (CGC) - the Ontario govt has approved a plan to license 20 stores a month starting next April. Canopy Growth expected 40 stores per month starting in January leaving a 300 store gap from expectations. This stock is still headed to $10. More research: Canopy Growth: Constellation Bid Appears Unlikely, For Now Stitch Fix (SFIX) - here comes the expected dip following another solid quarterly report....

Canopy Growth rallied 14% on the hiring of the CFO from Constellation Brands on the hopes of a bid. Constellation Brands has a large debt position suggesting a large bid is highly unlikely. An executive void during the Cannabis 2.0 rollout is an unwelcome outcome of hiring a new CEO. The price target remains $10, or roughly 5x EV/FY20 sales target. Canopy Growth  ( CGC ) finally  hiring a new CEO  is not the recipe for a stock rally in an expensive stock. In addition,  Constellation Brands  ( STZ ) isn't likely to launch a takeover bid costing upwards of $10 billion when the company lacks the cash. My  previous investment thesis  placing the stock at $10 remains intact with the further delayed rollout of Cannabis 2.0 and a new CEO not starting until January. Read the full article on Seeking Alpha.  Update - December 11, 2019 The stock is trying to hold $20. A positive plug from Cramer today is helping Canopy Growth, but ...

Stocks to watch on Tuesday: Stitch Fix (SFIX) - the online personalized style service reported a strong FQ1. Despite the rally, Stitch Fix is a fundamentally cheap stock trading at an EV/S multiple of 1x. The stock is up 50% off the lows so investors might look for dips to enter the stock, but the value remains insanely cheap. Canopy Growth (CGC) - the announcement of the Constellation Brands (STZ) CFO as the new CEO isn't a reason to celebrate. The cannabis stock is highly expensive at $20 with my previous value estimate below $10. In addition. Constellation Brands wouldn't hire a new CEO, if the company wanted to make a bid. The wine and spirits company doesn't have the cash for a big premium deal either. Fade this rally as the break of the downtrend is unlikely to hold. Disclosure: No position. Please review the disclaimer page for more details. 

The Canadian cannabis industry forecasts cutting cultivation capacity by up to 800,000 kg, but the top 10 producers are still expanding existing production. Aurora Cannabis still expects to more than double production from FQ1 levels while the top 10 producers are still on path to swamp legal demand. Revenue estimates are getting to levels where the company would need to see further material price cuts to not exceed targets. The stock price target is $2 without further Canadian cannabis industry rationalization. The major problems facing  Aurora Cannabis  ( ACB ) is that too much of the Canadian cannabis industry hasn't followed their moves with cutting cultivation capacity for 2020 and beyond. A few companies had already cut production targets for various reasons, but the bigger players in the industry still appear full speed ahead with expansion while the industry is already over supplied. For this reason, my  investment thesis  thinks Aurora Cannab...

Stocks to watch on Thursday: Kohl's (KSS) - the retailer is back trading at the yearly lows following a guidance cut for 2019 EPS due to investments in driving traffic to their stores as the company adds new brands. Today completes the 3-day rule and the stock is holding a higher low so far. Kohl's is a buy here. More research: Don't Overreact To Headlines Canopy Growth (CGC) - the stock has soared over the last couple of days due in part to a bullish analyst call by BofA and the news of the House Judiciary Committee voting in favor of the MORE Act which favors decriminalize marijuana. The stock has broken the downtrend, but investors should expect a quick reversal here as nobody expects the Republican controlled Senate to vote in favor of the MORE Act. My view the stock is on a path to $10 hasn't changed. More research: Canopy Growth: Still Rich Over $10 Disclosure: Long KSS. Please review the disclaimer page for more details. 

Canopy Growth just released horrible FQ2 results. The company reported a C$155.7 million Adjusted EBITDA loss that isn't sustainable despite their large cash balance. Canopy Growth forecasted the flower market to remain oversupplied until next June. A price target of $10 places the stock at a more reasonable 5x EV/FY20 sales targets. The Canopy Growth ( CGC )  FQ2 quarter  was so bad an investor will find the results very difficult to analyze in order to value the stock. As  previously warned , the company had meager expectations for a supposed budding cannabis empire while any weak results were bound to crush the stock. In fact, investors should consider the closing price of just below $16 with a market cap of $5.3 billion as still highly stretched with the dramatically reduced exceptions in the Canadian market. Read the full article at Seeking Alpha.  Update - November 21 Fade this rally, as CGC heads back to $10 and lower.  Conste...

Acreage offers a path to owing double the current position of Canopy Growth while offering a better valuation. The Acreage/Canopy Growth deal signaled a peak in the market while the ensuing collapse might signal the bottom. Acreage offers a solid standalone value assuming the deal never closes. The decision for  Canopy Growth  ( CGC ) to pay $300 million for a call option to purchase  Acreage Holdings  ( OTCQX:ACRGF ) has been a complete disaster. Not only has the cannabis market collapsed, but the stock market doesn't even see the deal closing in a reasonable enough time. Despite all of the mistakes of Canopy Growth, the Canadian cannabis giant has a pristine balance sheet to support future growth and reward shareholders that purchase the stock on the cheap via Acreage. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details.

Aurora Cannabis traded below $5 on Friday. Management is out of tune with market realities in the cannabis space. A move similar to Canopy Growth in the U.S. would signal a desperate company. The stock isn't likely to hold $5 with a market valuation of over 10x lowered FY20 revenues estimates. The case for owning  Aurora Cannabis  ( ACB ) at $5 turned weaker following  FQ4 results . The stock traded below this key price target on Friday and the MKM Partners  Sell call  is unfortunately correct based on the numbers and the commentary from management. My previous  investment thesis  called for supply rationalization to make the stock a Buy at $5 and the company has gone further over the edge into global production growth. Read the full article on Seeking Alpha. Update - October 1 Aurora Cannabis breaks $4. No end in site so don't try to time the bottom here. Update - September 26 The approval of the SAFE Banking Act by the Ho...

With   Canopy Growth (CGC)   breaking below $25, the next question is whether the stock will break below $20. The cannabis stock held above $20 back in 2018.  My guess for now is that the stock sees more weakness and does break below $20 by the end of September. Vote on whether you agree or disagree with this forecast.  Go to WhoTrades to vote.  Update August 26 The stock is back above $25, but the rebound was meniscal considering the $31 price target. Also, a $31 price target is very telling for a stock with a 52-week high near $60.  -Seaport Global's  Brett Hundley  upgraded Canopy Growth from Neutral to Buy and announced a new $31 price target. Disclosure: No position 

Canopy Growth failed to meet FQ1 estimates with sales dipping below key cannabis competitors in Canada. The company burned the cash balance down C$1.4 billion to C$3.1 billion in the quarter. The company harvested nearly 6,000 kg more than forecasted near quarterly end. Another EBITDA loss above C$90 million will push the stock down to the $25 price target and likely lower. A founding CEO being fired in a hot sector is usually not a good sign and the  FQ1 results  of  Canopy Growth  ( CGC ) reinforce that theory. The stock is plunging towards the 52-week lows and how Canopy Growth bounces around $25 will likely derive where the stock heads for the rest of the year. My  previous research  following the termination of CEO Bruce Linton had suggested this target was the likely outcome and this price might end up too conservative. Read the full article on Seeking Alpha More commentary - Out Fox The $teet - August 15 Disclosure: No positi...

Aurora Cannabis broke recent strong support above $7. The large cannabis player announced a new business model of growing cannabis at outdoor sites. The move combined with Canopy Growth news suggests the adjusted EBITDA positive target isn't maintainable. The stock appears poised to retest the $4s. With a couple of recent disasters in the Canadian cannabis sector,  Aurora Cannabis  ( ACB ) will likely return to the recent lows. The sentiment shift in the cannabis sector will impact all stocks and a subtle signal of a new business model is problematic. The  investment thesis  continues to tilt negative until a lot of the hype is stripped from the cannabis sector and the desire to add new production ends. Read the full article on Seeking Alpha.  More commentary on WhoTrades Disclosure: No position. Please review the disclaimer page for more details. 

Acreage Holdings is down substantially despite the future merger right from Canopy Growth. The corporate upheaval at Canopy Growth places the merger at risk and raises the prospects of failed math used to consume the deal. Avoid the stock until Canopy Growth gets on stronger financial footing. The  Canopy Growth  ( CGC )  firing  of the founding CEO and the related market ramifications aren't going to help  Acreage Holdings  ( OTCQX:ACRGF ) shareholders. The original merger was heralded as a big premium for Acreage shareholders, but the stock hasn't  fared well and the risk is to the downside unless the merger dissolves. Read the full article at Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Canopy Growth continues to prep for markets that aren't ready for its cannabis products. The company forecasts current quarter harvests of 34,000 kg will nearly quadruple the December quarter levels while demand has soured. Canopy Growth reported a massive C$97 million adjusted EBITDA loss that shocked the market. Money-losing stocks aren't likely to maintain a rich EV/S multiple of 11x FY21 revenue estimates (numbers analysts are likely to cut). On the path to inevitable success,  Canopy Growth  ( CGC ) continues to hit bumps in the road. The stock fell 8% following the release of outdated March quarterly results, in another sign that the leading cannabis company and the sector just aren't ready for prime time yet. My  bearish investment case  remains intact. Read the full article on Seeking Alpha.  July 3 Update CEO Bruce Linton was fired and the stock is no trading solidly below $40.  Check out WhoTrades for timely updates on th...

The market wants to push Aurora Cannabis towards previous highs. Cowen placed a $10.50 target on the stock while the previous high of $12.50 is on the radar. The Canadian cannabis market is about to become flooded with legal supply as the illegal supply undercuts prices. The best projection is that weak prices causes Aurora Cannabis to miss revenue targets this year, ultimately crushing the stock towards year end. My  investment thesis  on  Aurora Cannabis  ( ACB ) has long held that the cannabis stock might have another rally left based on sector momentum. In the short term, the market cares more about price than fundamentals and a move above $8 has been a signal for another test of previous highs. A big analyst call sealed the likely rally in the stock. Updated 3/13 The hiring of Nelson Peltz doesn't signify anything, but Nelson getting richer per the huge option grant to him. Regardless, the stock was big buy for this break above $8. Option Gr...