APHA - Canopy Growth: Time To Cede The Crown

• Canopy Growth trades at C$16B market cap and 40x EV/Sales despite reporting only C$135M revenue and negative C$86M EBITDA last quarter.
• The company has no near-term path to break-even EBITDA and has already burned through $3.5B of the $5.0B cash from Constellation.
• The stock has always traded at a large premium, along with Cronos, due to their corporate backers and large cash pile.
• Given the huge disparity between its fundamentals and valuation, we find it difficult to value Canopy, thus we prefer Aphria (cheaper) and leading U.S. MSOs (growth and cheaper).

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