Canopy Growth Corp Closes Above Inaugural NYSE Listing High For a Second Time

In a telling sign of strength, Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) has closed above its initial New York Stock Exchange (NYSE) listing high once more. Though the cannabis market isn’t clicking on all cylinders, it can take solace in the fact its undisputed sector leader continues to attractive significant investor inflows.

Canopy Growth’s NYSE high water mark was set on-open in the company inaugural listing day on May 24. Shares of WEED on the Toronto Stock Exchange gapped-up to $40.00/share, before retreating ↓15.76% over the next two-plus sessions as profit takers gained control.

Today is the second time Canopy Growth has breached $40.00/share on a closing basis. On June 6—the day before the historic Bill C-45 vote was scheduled to take place—WEED finished at $40.68/share after investors ran up prices in the sector in anticipation of a successful third reading vote. With that accomplishment in-hand, the sector sold off around 8-percent over the next four days as a main underlying catalyst had been vanquished from the market.

Now that Canopy Growth has round tripped from sub-$34 and back—closing up $1.26 to $40.65/share (↑3.20%)—investors have officially worked-off the worst of the recent post-legalization selloff blues. In fact, WEED closed just three cents shy of establishing a new post-NYSE closing high, meaning it can essentially set its sights on $41.40 and $44.00, which is the post-NYSE intraday high and all-time high, respectively.

The voracious appetite for Canopy Growth stock shouldn’t surprise anyone following the name. Just last week, the company raised C$500 million CAD via convertible note offering, which was the largest ever in the cannabis space. The offering was upsized ↑25% from the previously C$400 million aggregate principal amount announced just two days prior. The conversion rate of ~20 shares per $1000 note also implied a share price today of $48/share—a premium of 23 percent.

Canopy Growth CEO Bruce Linton talks about the company’s U.S. listing and other tidbits

Clearly, investors—increasingly of the deep-pocketed institutional kind—show no signs of pulling back the checkbook. If there’s any signs of peripheral fear that overcapacity, frothy valuations or retail roll-out risks permeate the market, we aren’t seeing them. Heading into the company’s Q4 and fiscal year earnings release on June 27, 2018, investors are undauntedly buying every significant dip they can get their hands on. 

What comes next is, of course, is usually difficult to decipher. Up until now, earnings have not mattered for any of the cannabis names we follow; I suspect they won’t until Canadian legalization starts impacting the bottom line in a couple of quarters. Thus, Canopy Growth current move is unlikely a pre-earnings buying phenomenon driven by an expected beat in earnings/revenues.

More likely, Canopy’s move upwards is being driven by greater access to American investor dollars and the large institutional funds comfortable enough to stake increasingly larger positions post Bill C-45 passage. While profit taking tied the company down temporarily, Canopy looks poised to test it upper limits in the coming days.

Thus, the inevitable drive to $44/share, and the market’s reaction upon its breach, will become increasingly in-focus in the coming days. Should the glass ceiling at $44 fail to provide much resistance for clamoring bulls, there’s potential for the stock to run to $50/share very quickly. Not only would further established resistance be absent, $44/share would represent the last chance for investors to buy Canopy within the pre-legalization range.

In the words of Midas Letter CEO James West:

“Now with an implied valuation of $11 Billion, Canopy Growth has pulled way out in front of the next biggest licensed producers, and established a new status for the cannabis industry in its entirety.”

It’s quite possible (even probable) investors may act accordingly by panic buying shares as the all-time high rapidly approaches.

Original article: Canopy Growth Corp Closes Above Inaugural NYSE Listing High For a Second Time

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