Why Canopy Growth's Reverse Split Marks a Turning Point for the Business
Canopy Growth (NASDAQ: CGC) is a bit of a grinch this Christmas. Rather than giving, it's taking back shares from investors. The company used a reverse stock split this week to get its share price back up to over the all-important $1 mark so that it can stay on the exchange.
A reverse split doesn't mean anything for investors as your total value in the stock remains the same; if you were down 90% in Canopy Growth stock, you're still down 90%. The higher price doesn't mean anything. But the reverse split is symbolic of one thing: the gloomier outlook for the stock and the industry as a whole.
Back in 2019, when Canopy Growth announced it was planning to acquire multistate marijuana company Acreage Holdings, there was a lot of excitement surrounding the business and its future growth. What a genius move to secure a deal in advance. The worst-case scenario is that investors would simply have to wait for it to pay off. That was enough to lure in investors and convince them that investing in Canopy Growth would be a no-brainer investment.
Source Fool.com