Why Canopy Growth Stock Crashed on Friday

Canopy Growth (NASDAQ: CGC) stock collapsed in morning trading Friday, down 20.5% through 11 a.m. ET after the company reported a comically bad earnings miss.

Heading into today's report, analysts forecast the Canadian cannabis company would lose $0.20 per share in its fourth quarter of fiscal 2025. Instead, Canopy Growth reported a loss of (better sit down for this) $1.32 per share.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Canopy Growth's gigantic Q4 miss

Investors were not amused.

Canopy management tried to put a brave face on the results, leading off its report by noting Canadian sales, at least, grew 4% year over year, and Canadian medical cannabis sales in particular grew 13%. CEO Luc Mongeau noted further that he has taken "decisive actions to accelerate growth and profitability by unifying our medical cannabis businesses globally" (even though he highlighted cannabis sales in Canada separately).

He also argued Canopy has made "marked year-over-year improvement in Adjusted EBITDA and cash flow in FY2025," and remains "committed to achieving positive Adjusted EBITDA in the near-term and positive Free Cash Flow over time."

But Canopy is not there yet.

Is Canopy Growth stock a sell?

Globally, Canopy's sales fell 11% in Q4, and free cash flow was negative $36.2 million. For the full year, sales were down 9% and FCF was negative $176.6 million.

Viewed in the most favorable light, therefore, one could argue that at least cash burn is decelerating at Canopy (four quarters of $36.2 million cash burn would imply a FCF run rate of only negative $144.8 million). But sales growth is still negative, and it got even more negative in the year's final quarter.

Sorry, folks. I just can't find a reason to want to own Canopy Growth stock until this trend improves.

Should you invest $1,000 in Canopy Growth right now?

Before you buy stock in Canopy Growth, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Canopy Growth wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $853,108!*

Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.