... when you predict profits and only deliver losses, the next step is out.
Canadian cannabis company Canopy Growth Corp stunned the market with the news that its co-Chief Executive Bruce Linton is stepping down from his role and will leave the board. Our SP+GTM algorithm had forecaster the move for two years. Excessive capitalization remains the disease without a cure in sight. The company CGC, -1.52 %, WEED, -0.72% which is the biggest cannabis company by market capitalization thanks to a $4 billion investment from Corona beer distributor Constellation Brands Inc. STZ, +1.31% . Meanwhile, Mark Zekulin has agreed to be sole CEO and will work with the board to find a new leader, a task that will include internal and external candidates. “Creating Canopy Growth began with an abandoned chocolate factory and a vision,” said Linton in a statement. “The board decided today, and I agreed, my turn is over.”
Linton has been a very public face for Canopy and has given multiple interviews to publications across the globe telling the company’s story. Canopy was founded in 2013 and commanded a market cap of almost $14 billion. Earlier this month, it won shareholder approval to acquire Acreage Holdings Inc. ACRGF, -4.41% a multi-state operator that will give it a foothold in the lucrative U.S. market as soon as federal laws are eased.
The news comes just weeks after Canopy’s fiscal fourth-quarter earnings disappointed investors as the company’s losses mounted and it sold less cannabis sequentially, in the second quarter of recreational cannabis legalization in Canada. Constellation Brands, which has made a significant bet on Canopy, was not happy with Chief Executive William Newlands saying on the company’s earnings call last week that he was not pleased with Canopy’s numbers. “While we remain happy with our investment in the cannabis space and its long-term potential, we were not pleased with Canopy’s recent reported year-end results,” Newlands said, “However, we continue to aggressively support Canopy on a more focused long-term strategy to win markets and form factors that matter, while paving a clear path to profitability.”