By Sahil Shaw
(Reuters) -Canadian pot producer Canopy Growth Corp on Friday posted a bigger loss in the second quarter and pushed back its target for turning profitable, citing domestic supply challenges and slower revenue growth in the United States.
Shares of Canopy Growth, one of the most valuable pot producers in the world, slumped 10% to C$14.88, their worst level since March 2020. Other weed stocks like Aurora Cannabis, Tilray Inc and Cronos Group Inc fell 3% to 4%.
Investors have been frustrated by the lack of profits at most Canadian cannabis firms despite the country having legalized recreational use for more than three years. High spending on expansion coupled with supply bottlenecks has plagued producers in the country.
Canopy, which had earlier said it would be profitable by the end of this fiscal year, is now unable to say when it expects to reach that milestone, Chief Executive Officer David Klein told Reuters in an interview.
He said the company noticed a shift in consumer preference towards 'single-strain high THC flower' in Canada and could not change the type of marijuana it was producing fast enough.
THC, or 'tetrahydrocannabinol', is the compound in cannabis that causes a high. Concentration of THC varies depending on the type of marijuana plant.
"When that (consumer shift) happens, we can't change our growing 'mid-flight' and so we were unable to meet some of the demand, which caused our revenue to fall," Klein said.
The company has started to grow more 'premium' flower now but it will likely take until the end of its fiscal year to reach consistent production, Klein added.
Klein also said that the magnitude and pace of Canopy's U.S. revenue acceleration in the second half of the fiscal year will be more modest than it had hoped.
On an adjusted basis, Canopy's loss before interest, taxation, depreciation and amortization widened to C$163 million ($130.66 million) for the three months ended Sept. 30, from C$85.7 million deficit a year ago.
(Reporting by Sahil Shaw and Shariq Khan in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)