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What Results Of Sky-High Aurora Cannabis And Canopy Growth Tell Us About Marijuana Stocks – Motley Fool



Investors were eagerly awaiting the first quarter sales of the Canadian market for recreational marijuana. In recent days, they have received first results from two of Canada's largest marijuana companies.

Aurora Cannabis [196459003] (NYSE: ACB) and Canopy Growth (NYSE: CGC) each of them reported the results of their quarters ending December 31, including 11 weeks recreational sales. While several other Canadian producers still have to provide quarterly updates, what Aurora and Canopy had to say gives some great tips about what investors can expect from other marijuana stocks.

<img alt = "Red Canadian maple leaf surrounded by marijuana leaves Source: Getty Images

Growth in sales ̵
1; but do not count on large market shares

Sales growth, like Aurora Cannabis, and Canopy Growth, achieved in Aurora has increased its net income by 363% over the year, Canopy's net income grew by 283%, as expected, this tremendous growth arose as a result of the initial sale of a Canadian holiday bank

When Cronos Group (NASDAQ: CRON) Tilray (NASDAQ: TLRY) and other major Canadian producers Ariuans announce their financial results over the next few weeks, you can argue that they will also announce a huge increase in sales, but do not expect any of the other companies to have a large share of the Canadian recreational market.

Aurora Cannabis stated that She has a market share of 20% of consumer sales based on Health Canada data. The company has reached a market share with recreational sales in the bank for a total of 21.6 million dollars. Canopy's record sales were much higher – $ 57.7 million. Between Aurora and Canopy, there was not much market share left for other manufacturers to cut.

It is also noteworthy that Aurora and Canopy require significantly higher production capacities than their counterparts. A company can only sell what it can produce or source from another marijuana manufacturer. With demand for vacations in Canada that go beyond the scope of the offer, the market share will be correlated directly with the capacity much more than any other differentiating factor between the different brands of products.

Fuzzy picture for medical cannabis

there may be significant differences in how well other companies performed on the Canadian medical cannabis market.

Aurora Cannabis reported that sales of dry cannabis for medical purposes in Canada increased by 12% compared with the previous quarter. On the other hand, Kanopy Growth Canadian Canadian Cannabis Sales fell. Why were these results different?

Comparison of the quarter with respect to the Aurora quarter contributed to the availability of a full quarter sales of MedReleaf. The company completed the acquisition of MedReleaf on July 25, 2018.

Canopy attributed its decline in Canadian sales to physicians by several factors. First, the company believes that patients have the opportunity to buy a recreational pot was fewer patients who were looking for recipes for medical cannabis. Secondly, Canopy has been guided by its famous Tweed brand on the recreational marijuana market and redirected its Spectrum brand to the medical market.

The unique circumstances for Aurora and Canopy make it difficult to figure out how other companies such as Cronos and Tilray will be able to cope with Canadian sales of medical cannabis. Nevertheless, Canopy speculation that some patients bought a recreational pan instead of receiving medical cannabis could flatten or lower sales of medical cannabis for other marijuana growers.

It is really early for international market opportunities

And Aurora Cannabis and Canopy Growth talked about enormous opportunities in the international markets of marijuana. However, relatively small international sales have shown how early this is for many of these markets.

Only 6% of the total income of Aurora cannabis originated in international markets, primarily in Germany, and the company reported that sales of European cannabis increased by only 1.8%

Canopy Growth demonstrated higher sales growth in the international market, but it still amounted to only 15% of the company's medical cannabis sales and slightly more than 3% of the total net income.

Tilray can surpass both Aurora and Canopy on the international front. In September 2018, Tilray became the first Canadian producer of marijuana, which exported to Germany both oily marijuana and cannabis flower products. Most, however, can be expected that international markets remain a great opportunity for marijuana makers, but a small percentage of their current income.

Great picture

The latest quarterly updates seem to be good for another Canadian marijuana stock. But the picture of just one quarter does not give a complete picture of the industry.

Both Aurora and Canopy expect higher profits later in 2019 and are looking forward to launching new products in Canada at the end of this year. cannabis and drinks. Aurora and Canopy also optimistic about the potential for entry into the US market in the not too distant future.

These encouraging prospects should also be applied to other marijuana stocks, and the global market will continue to expand in the long run. As the old message says, the tide raises all boats.


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