Canopy Growth Corp (TSE:WEED) Shares Rally 4.3% On The Back Of An Expansion Into Spain

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On Canopy Growth Corp (TSE:WEED) said via an official statement that it had finally landed in Spain. In the statement, the company revealed the acquisition of Cáñamo y Fibras Naturales, S.L. (Cafina), a licensed producer of cannabis based in Spain. The acquisition expands the European footprint of the Canadian cannabis giant which has ambitions to dominate the global cannabis trade.

Cafina will enable Canopy to open up new market opportunities

For starters, the Spanish regulators are a bit hard on the cannabis sector and, as such, there are only three licensed cannabis firms. Of the three, Cafina owns a greenhouse that is 1,600 sq. ft. where it cultivates hemp. Notably, the government only allows for medicinal use of cannabis and sets the limit of THC content of the products at 0.2%.

The company is fairly old considering the nascent nature of the cannabis industry. However, it has a solid team of focused and experienced researchers who also produce and sale hemp seed. In particular, Canopy Growth hopes to add the extra square feet to its existing facilities in Denmark and Germany.

Commenting on the developments, Mark Zekulin, President & Co-CEO of the company said that the acquisition is strategic. Further, Cafina will facilitate Canopy Growth’s ambition to position itself as the premier supplier of CBD products and medical cannabis in continental Europe. Interestingly, the company also has a business relationship with another Spain-based company which produces cannabis flower.

The share price is gaining substantially

As per Zekulin, the idea is to diversify the production capabilities and also create an environment where the company can easily scale its operations. Notably, this is the same approach the company is using in Canada and it is helping to give competitors like Aurora Cannabis a run for their money. With the Spanish footprint, Canopy Growth will be able to launch its operations far into new markets, Zekulin added.

Following the news, the Canopy Growth shares rallied 4.3% and settled at $42.50 on Tuesday. Interestingly, the stock climbed higher after reports emerged that AP7 pension fund, a Swedish government-run company, bought shares in the company. According to the reports, the transaction took place soon after Canopy Growth made to the MCSI ACWI Indexin 2018. Notably, the stock gained 4.39% to $42.52 in the Tuesday morning trading sessions. As such, the year-to-date performance of the CGC stock is now up 58.24% against a rise of 16.75% for the S&P 500 index.

Source: Stockcharts.com

Canopy eyeing eye-watering revenues in calendar year 2019

Despite the positive developments, Canopy expects to go without profits this year. According to Bruce Linton, the Co-CEO of Canopy, the company does not worry much about the profits. Instead, they are focusing on the longer term where the company expects to rake in revenue in the order of $744 million during the 2020 fiscal year.

Notably, the company has experienced tremendous growth in the past year with the stock gaining 29% during the period. Also, the period saw the company build its market cap to $14.5-billion. However, the firm reported $189 million in revenues during the 2018 calendar and therefore the prospect of achieving $744 in 2019 calendar is a massive one, yet achievable.

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