Canopy Growth Investment Results In $1.0 Billion Impairment For Constellation Brands

Canopy Growth Corp (TSX: WEED) continues to cause problems for Constellation Brands (NYSE: STZ). The latter this morning reported its second quarter 2023 financial results, and as we had predicted, was forced to take a significant write-down on the value of its Canopy investment.

The ongoing poor performance of the cannabis company hit a crescendo in the most recent quarter, when the company was forced to record impairments of $1.73 billion in goodwill, which represents all goodwill associated with the firms cannabis operations. The result was a net loss for the quarter of $2.08 billion – which then hit Constellation hard.

Due to the method in which Constellation records its investment in Canopy, referred to as the equity method, that impairment trickled down to Constellation as well. For the three months ended August 31, 2022, Constellation was forced to recognize a $650.7 million loss on its books from Canopy, of which $460.8 million is a direct result of Canopy conducting those impairments.

However, further impairments were also required during the quarter due to the falling share price of Canopy, the uncertainty of the stock price recovering, and what Constellation refers to as the uncertainty of US federal cannabis. The result, is a $1,060.4 million impairment was taken by Constellation in the second quarter of fiscal 2023 – on top of the loss recorded for the firms quarterly performance.

The firms equity method investments as a result have now fallen below the $1.0 billion level, to that of $833.4 million.

In terms of the quarter as a whole, Constellation Brands recognized revenues of $2,864.3 million, and gross profits of $1,325.9 million. After the impairments it was forced to take as a result of its initial $4.4 billion investment in Canopy that is now worth a fraction of that figure, the company recorded a net loss of $1,140.7 million for the second quarter, reflecting a loss per share of $6.30.

Constellation Brands last traded at $235.95 on the NYSE.


Information for this briefing was found via SEC.gov, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

2026 Could Be Gold’s Biggest Year Yet!? | Ryan King – Equinox Gold

Gold Is Screaming Higher While Currencies Burn | Simon Ridgway – Rackla Metals

We Have the Highest-Grade Antimony Deposit in North America!? | Jim Atkinson -Antimony Resources

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

Is the Termination of the Hiku Merger the Best Thing to Happen to WeedMD?

A little over a year ago, it was announced that Hiku Brands would be acquiring...

Tuesday, May 7, 2019, 09:16:36 AM

Canopy Growth Pushes Out CFO, President As Market Position Slides

Evidently Canopy Growth (TSX: WEED) is not satisfied with its poor performance to date. The...

Friday, November 19, 2021, 09:15:08 AM

Canopy Growth: Analysts Anticipate Q1 Revenues Of $149 Million

Canopy Growth Corp (TSX: WEED) (NASDAQ: CGC) announced that they will be reporting their fiscal...

Tuesday, August 3, 2021, 03:28:00 PM

Canopy Growth Very Quietly Released A Weed-Growing Game

A Twitter user recently discovered a “Zelda-type” 2D weed-growing game from following QR codes printed...

Monday, April 4, 2022, 04:37:00 PM

Canopy Growth CEO David Klein To Retire

Canopy Growth’s (TSX: WEED) David Klein is finally throwing in the towel. The chief executive...

Friday, August 16, 2024, 08:22:38 AM