Canopy Growth Corp Surges To Daily Highs On Constellation Brands Comments

The price action in Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) has made a dramatic reversal today, owing to comments made by major stakeholder Constellation Brands. The dramatic reversal in fortune is yet another reason why it pays to have a great operating partner at your side.

Reportedly, Constellation Brands made the favorable comments during a 10:30 am EST conference call to discuss surprisingly good quarterly results. While I was not privy to the call, several reports on social media reveal the bullish comments directed Canopy Growth’s way. Here is a sampling of such comments:

Constellation Brands On Conference Call Says Cannabis Market Opening Up Faster Than Expected $STZ $CGC

— PSK2329 – JHC (@psk2329) October 4, 2018

$STZ CEO Rob Sands, on Canopy: “We continue to be extremely bullish, if not more bullish, since we’ve announced the deal.” Repeats $CGC‘s supply contract stats, says “we expect to take a significant share of that business as it develops over the next 12-18-24 months.”

— Bill Peters (@IBD_BPeters) October 4, 2018

Constellation, in talking up Canopy Growth, notes co has been awarded 35% of supply contracts throughout Canada’s provinces for recreational market. $4B will go toward strategic priorities beyond Canada, including the US $STZ $CGC

— Bill Peters (@IBD_BPeters) October 4, 2018

$CGC sharp pop here on $STZ saying has largest legal cannabis footprint

— The Daytrade (@d4ytrad3) October 4, 2018

Clearly, we can see the effects Constellation’s comments have exerted on the Canopy Growth’s stock price. With shares trading at the day’s lows, the volume spike just after 10:45 EST is clearly evident. The surge helped push prices past the daily and closing highs on an aggregate basis, although there appears to be some giveback as I type.

The bullish comments also put a bid under the entire sector, with the benchmark Horizons Marijuana Life Sciences Index ETF (TSE:HMMJ) rising about two percent on the news. Whether Canopy Growth can sustain the momentum is another story. All major American stock exchanges are moderately weak this morning, paced by NASDAQ which is currently lower by ↓1.56%.

Nevertheless, the optimism elucidated by Constellation Brands is a bullish anecdote for the market, as they believe not just Canopy Growth—but the uptake of cannabis in general—is going faster than anticipated. Coming from a leading transnational beverage conglomerate, these are heady words.

Keep in mind that if Constellation Brands were to exercise all existing and new warrants obtained in its August 15th deal with Canopy Growth, its ownership would exceed 50 percent. Should that occur, a proportional share of Canopy’s income would show up on the parent company’s income statement (STZ), assuring the company of future growth in 2021 and beyond. For an industry struggling to obtain meaningful growth, this is a significant and advantageous benefit.

As the tagline on Canopy Growth’s press releases often syas: Here’s to future growth. We couldn’t agree more.

Original article: Canopy Growth Corp Surges To Daily Highs On Constellation Brands Comments

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