Canopy Growth (NASDAQ:CGC) stock is rising higher on Friday after the cannabis company announced it won’t fund the BioSteel Sports Nutrition business any longer.
According to Canopy Growth, this decision will benefit the company in its efforts to restructure and focus on its marijuana business. That includes reducing the company’s cash burn while also simplifying its business operations.
David Klein, CEO of Canopy Growth, said the following about the BioSteel Sports Nutrition decision today:
“Canopy Growth has marked yet another major milestone in our transformation plan, as while BioSteel’s business has shown significant year-over-year revenue growth, and we believe the brand remains an attractive asset, it does not align with Canopy Growth’s cannabis focused asset-light strategy.”
How This Affects CGC Stock
Investors will note that Canopy Growth is the largest creditor and shareholder in BioSteel. Also worth knowing is that BioSteel has filed for bankruptcy in Canada and plans to do the same in the U.S. This has Canopy Growth expecting to receive a proportionate share of any recoveries from the process.
Investors in CGC stock are reacting positively to the news, with some 64 million shares changing hands as of this writing. That’s quite the jump over its daily average trading volume of about 48.6 million shares. It also has CGC stock up 13,6% as of Friday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
