Jul 13, 2022
After the Canadian cannabis sector peaked in late 2018/early 2019, valuations have plummeted and the negative trend has shown no signs of slowing down.
In the section below, we highlighted seven of the largest Canadian Licensed Producers (LPs) based on market capitalization.
Canadian LP Market Capitalizations (in USD$)
Canopy Growth Corporation (TSX: WEED) – $1.05 billion
Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB) – $418 million
Tilray Brands Inc. (TSX: TLRY) (Nasdaq: TLRY) – $1.64 billion
HEXO Corporation (TSX: HEXO) (Nasdaq: HEXO) – $104 million
Organigram Holdings (TSX: OGI) (Nasdaq: OGI) – $329 million
Cronos Group (TSX: CRON) (Nasdaq: CRON) – $1.17 billion
Sundial Growers Inc. (Nasdaq: SNDL) – $803 million
At their peak, the aggregate market capitalization of these Canadian LPs was greater than $50 billion. Currently, these companies have a less than $6 billion market capitalization and we are surprised by the size of the pullback. Although these operators never deserved a $50+ billion combined valuation, we believe the decline is overdone.
When compared to the market capitalization of seven of the largest United States multi-state operators (MSOs), the Canadian LPs are worth less than half of the US MSOs. When comparing the amount of revenue generated by the Canadian LPs to the US MSOs, we noticed a much larger disparity between the groups.
Over the next year, we expect the disparity in revenues and valuations between these groups to become more significant. During this time, we expect the US operators to report above-average revenue growth and higher adjusted EBITDA when compared to the same period in the prior year.
Our outlook for Canada’s cannabis industry is less optimistic than that for the US and we expect the industry to continue to be under heavy pressure in the back half of 2022 and into 2023. We believe the most significant potential catalyst for these operators is the legalization of cannabis at the federal level in the US.
https://technical420.com/cannabis-article/when-will-the-canadian-cannabis-sector-bellwethers-finally-bottom-out/#
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