Canopy Growth, the world’s largest cannabis company by market cap, has finally given investors what they’ve been craving in announcing a new CEO, David Klein, sending the company’s shares skyrocketing this morning.
Canopy Growth (NYSE: CGC), poached Klein from its own biggest investor, Constellation Brands (NYSE: STZ), the maker of Corona, where he served as the beer and wine giant’s chief financial officer. Constellation Brands owns a nearly 40% stake in Canopy Growth, investing a $4 billion stake last year, which sent the stock soaring only to crater in what has been a bad time for cannabis stocks.
Canopy is down more than 20% on the year after peaking at $52.03 on April 29, and that’s after a 13-plus percent spike by 11:45 a.m. EST. The sharp decline this year led Canopy to fire founder and former co-CEO Bruce Linton as Constellation sought more control over its substantial investment in the cannabis industry.
“David brings a wealth of expertise to this role, having served in a number of senior leadership capacities over the past 14 years at Constellation Brands,” Canopy said in a press release. “His capabilities include extensive CPG and beverage alcohol industry experience, strong financial orientation, and experience operating in highly regulated markets in the U.S., Canada, Mexico and Europe. David is an experienced strategist with a deep understanding of how to build enduring consumer brands while leveraging operational scale across a dispersed production footprint. He is a strong leader with a proven track record of developing diverse and high performing teams.”
Canopy isn’t the only cannabis company to take it on the chin this year amid access problems in Canada along with black market sales cutting into the legal industry.
Industry leaders Tilray (NASDAQ: TLRY), Aurora Cannabis (NYSE: ACB), and Cronos (NASDAQ: CRON) all have seen sharp declines in 2019.
But Canopy Growth, with its market cap of nearly $6.5 billion, was expected to perform better with its roster of high-profile celebrity endorsers including Martha Stewart, rappers Snoop Dogg and Drake, and comedian Seth Rogen.
“Canopy Growth sits at the forefront of one of the most exciting new market opportunities in our lifetime,” Klein said. “Thanks to the efforts of Mark and the entire team at Canopy Growth, no company is better positioned to win in the emerging cannabis market. I look forward to working with the team to build on the foundation that has been laid, to develop brands that strongly resonate with consumers, and to capture the market opportunity before us. Together we will drive sustainable, industry-leading growth that benefits employees, shareholders and the communities in which we operate.”
Canopy Growth finished the day up 14%, closing at $21.29.
Full disclosure: The author of this piece holds small stakes in both Canopy Growth and Aurora Cannabis.
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