Why Canopy Growth Stock Dropped 13% This Week
Shares of Canopy Growth (NASDAQ: CGC) are down 13% this week as of Thursday's close, according to data provided by S&P Global Market Intelligence, after the cannabis producer completed a reverse-stock split and completed the divestment of a small subsidiary business.
Recall Canopy Growth stock also plunged more than 35% last week when the company unveiled the structure of the then-pending 1-for-10 "share consolidation," otherwise known as a reverse-stock split. Canopy Growth's consolidation officially took effect before the market opened yesterday (Dec. 20), reducing the number of outstanding shares by a factor of 10 while increasing the per-share price of its new common shares by the same multiple.
But why did Canopy Growth need to make this move in the first place? According to the rules of the exchange on which Canopy Growth stock trades, any stock that closes below $1 per share for 30 consecutive business days risks being delisted, though stocks in violation of the rule can also regain compliance by closing at or above $1 per share for 10 consecutive trading days. Canopy Growth shares had plunged more than 70% year to date at the time of last week's announcement and had hovered below the $1 mark since the middle of September 2023.
Source Fool.com
