Canopy Growth Trading Guide: How to Trade CGC Share CFDs

Founded in 2013, Canopy Growth (CGC) is a Canadian company of the local and international cannabis industry.

Let’s take a look at what kind of products the company sells, what the drivers of the Canopy Growth price share are, and how to trade stocks in this article.

TL;DR

• Canopy Growth is a Canadian company that offers a variety of marijuana products through several brands.
• The company also characterises itself as a ​​Consumer Packaged Goods (CPG).
• The share price of Canopy Growth can be influenced by various factors, from competition and regulations to the evolution of the marijuana industry, the USD/CAD exchange rate, earnings reports and supply chain, among others.
• Over the short-term, traders can trade Canopy Growth shares with Contracts For Difference (CFDs) through various share trading strategies (trading economic data, breakout trading, support and resistance trading, and trend trading, among others).

What Is Canopy Growth (CGC)?

Canopy Growth Corporation is a company in the cannabis industry based in Canada that owns and manages various businesses that produce, distribute, and sell cannabis and hemp-derived products.

Their product portfolio offers a wide variety of formats to cater to a range of consumer preferences and medical needs within the legal cannabis market, such as dried flower, concentrated cannabis extracts, vapes, cannabis-infused drinks and food, as well as accessories.

A Brief History of Canopy Growth

• 2013: Creation of the company under the name ‘Tweed’.
• 2015: The company is renamed Canopy Growth Corporation.
• October 2018: Canada becomes the second country, following Uruguay, to legalise the possession and use of recreational cannabis.
• November 2018: Constellation makes a $5 billion CAD ($4 billion USD) investment in Canopy Growth.
• October 2022: The company announces the establishment of Canopy Growth USA, a holding company, aiming to enhance the cannabis ecosystem within the United States, recognized as the world's largest cannabis market.
• December 2023: Canopy Growth sells his “This Works” business to Inspirit Capital.

What Are the Different Brands of the Canopy Growth?

As of 2024, Canopy Growth offers a diverse range of products under distinct brands tailored for Canada, the United States, and international markets.

In Canada, the brands include Tweed, Doja, LivRelief™ Infused Transdermal Creams, Deep Space, Ace Valley, 7ACRES, Vert, Twd., Wana™, and Hiway. The company's American brand is Martha Stewart CBD. For international markets, the brands are Spectrum Therapeutics, Storz & Bickel, and Canopy Medical.

At the end of December 2023, Canopy Growth operated through four primary segments:

• Canada Cannabis: This segment, representing their core business, generated 52% of the company's total revenue and contributed 37% to the gross profit. It focuses on production, distribution, and sale of cannabis products within the Canadian market.
• Rest-of-World Cannabis: This segment contributed 13% of the total revenue and 16% of the gross profit. It encompasses Canopy Growth's international cannabis operations, including production and sales in various countries outside of Canada, such as medical uses in Europe and Australia.
• Storz & Bickel: Acquired by Canopy Growth in 2018, this segment specialises in vaporizer technology and related accessories. It contributed 22% of the total revenue and boasted a gross profit margin of 32%.
• This Works: Previously a part of Canopy Growth, this segment focused on bath, body, and skincare and wellness products. It contributed 9% of the total revenue and had a gross profit margin of 16%.

Where Are Canopy Growth Shares’ Listed?

As of 2024, Canopy Growth stock trades under two tickers: ‘CGC’ on the National Association of Securities Dealers Automated Quotations (NASDAQ) and ‘WEED.TO’ on the Toronto Stock Exchange (TSX).

While classified as a ‘Pharmaceuticals’ industry on the TSX and as a ‘Pharmaceuticals and Biotechnology’ industry on the NASDAQ within the broader ‘Healthcare’ stock sector, remember that Canopy Growth focuses on cannabis products, which is a distinct niche within the pharmaceutical industry.

What Can Influence the Price of Canopy Growth Shares?

In addition to taking into account what determines stock prices in general, you should also consider unique drivers linked to the cannabis industry that the company targets. Let’s take a closer look at factors that can influence the price of Canopy Growth shares:

Evolution of the Cannabis Legalisation Landscape

The ever-evolving legal landscape surrounding cannabis is often seen as a major driver for Canopy Growth's stock price.

Expansion of legal markets in North America and internationally can create significant growth opportunities, potentially boosting the share price. Conversely, stricter regulations or delays in legalisation can dampen trader enthusiasm and lead to sharp price declines.

2024 could be an interesting year for the American cannabis industry, as the US Department of Justice (DOJ) proposed in May 2024 to reclassify cannabis from Schedule I drug (considered to have no medical value) to Schedule III drug (with a recognized potential for addiction but also potential medical benefits).

If approved, this could significantly impact Canopy Growth and its peers, as a less restrictive classification could increase research about cannabis, improve banking access, and potentially allow interstate commerce of cannabis.

Cannabis Consumption Trends

​​Cannabis consumption trends can directly influence Canopy Growth's stock price by influencing the demand for its products.

A surge in recreational or medical cannabis use can signal potential increased demand for Canopy Growth's products, presumably leading to higher stock prices. Conversely, a decline in consumption or a shift in consumer preferences towards specific cannabis products could put downward pressure on the stock price if Canopy Growth isn't well-positioned to meet those changing demands.

New Product Development & Competition

New product development can be a double-edged sword for Canopy Growth's stock price.

Successful product launches that cater to consumer demand and capitalise on emerging trends within the cannabis industry can generate excitement, boost sales forecasts, and drive the stock price upwards. This is especially important in a competitive landscape where Canopy Growth needs to differentiate itself from its peers.

However, products that miss the mark, fail to gain traction with consumers, or face unexpected regulatory hurdles can result in disappointment, lost revenue, and a potential decline in the stock price. Canopy Growth's ability to develop and launch successful new products, while navigating a competitive environment, can be a key factor potentially influencing trader confidence and its stock price movements.

Operational Efficiency & Supply Chain

When Canopy Growth demonstrates efficient resource management, operational efficiency and optimised supply chains, it can be seen as a sign of a well-managed company and translate to potential higher earnings, which can be a major driver for stock price increases.

Conversely, operational inefficiencies can lead to production delays, higher costs, and ultimately, lower profitability. This can negatively impact trader sentiment and potentially cause the stock price to decline.

Exchange Rates

Canopy Growth is a Canadian company with international operations. The impact of exchange rates on its financial performance is influenced by several factors, including the relative strength of the Canadian Dollar (CAD) compared to currencies in its key export markets (primarily the US Dollar), the proportion of revenue generated from exports, and the extent to which the company relies on imported materials.

Company Financial Situation

Canopy Growth's financial performance has a significant influence on its stock price. Traders closely monitor its financial reports during the earnings season as they provide insights into the company's profitability, growth prospects, and overall financial health.

Generally, strong or better-than-expected earnings reports boost trader confidence, potentially driving the stock price up. Conversely, weak earnings reports can erode trader confidence, possibly leading to a sell-off and a decline in the stock price.

The earnings season also presents an opportunity for traders and investors to evaluate the company's future financial guidance on its profitability, sales, EPS, market share, etc. A positive outlook for revenue and profitability can generate excitement and potentially increase the stock price. On the other hand, a weak outlook can lower positive trader sentiment and exert downward pressure on the share price.

Canopy Growth Shares: How to Trade Canopy Growth’s Stock

Now that we’ve covered the potential drivers of Canopy Growth share price, you might be wondering how to trade the stock:

Traditional Share Trading vs CFD Share Trading

The first distinction to make is between traditional share trading, which occurs when you buy physical shares of a company to become a shareholder and Contracts For Difference (CFD) on shares that happen when you trade the price of a stock without owning the underlying asset.

Your choice often comes down to the difference between trading and investing.

Buying shares is typically seen as a longer-term investment strategy, aiming to benefit from potential stock price appreciation over time (position trading). If you decide to own Canopy Growth stocks, you can be entitled to vote on certain decisions and to receive a dividend if the company were to ever distribute any.

On the other hand, trading shares with CFDs allows you to speculate over the short-term (day trading and swing trading) on whether the price of Canopy Growth shares will go up or down, without actually owning the stock. CFDs also often allow trading with leverage, which magnifies both potential profits and potential losses.

If you want to learn more about CFDs stock trading vs share trading, read our article titled 'What Are the Differences Between CFD and Share Trading?'

Technical Analysis vs Fundamental Analysis vs Sentiment Analysis

To trade Canopy Growth shares, traders often use either technical analysis or fundamental analysis.

While technical analysis relies on the study of price movements on various trading chart types, price history and technical indicators to try to determine future trends and price movements of Canopy Growth, fundamental analysts rely instead on quantitative and qualitative data. This data includes economic, social and political factors that can affect the intrinsic value of the cannabis company.

It is also possible to use market sentiment analysis, which takes into account the emotions and psychology of traders in their trading decisions.

The idea is to determine the predominant sentiment in an attempt to predict the potential future direction of an asset. For instance, if the majority of traders are pessimistic about the future of the stock, prices could potentially fall. Conversely, if they are optimistic about the stock's future, prices could rise.

Canopy Growth Trading Strategies

Depending on the type of market analysis you choose to use to determine whether to buy or sell shares, there are several popular trading strategies.

For example, if you want to adopt a very active strategy, you can use news trading, which allows you to take advantage of very short-term price movements based on news likely to affect the share by trading economic data.

You can also analyse the overall state of the market to determine the main trend. If prices appear to be moving into a phase of sideways consolidation, you could use a trading strategy based on breakouts or range trading. Range trading generally means trading a stock between support and resistance, while breakout trading involves taking advantage of the acceleration in prices once they have left a consolidation phase.

What Is Canopy Growth Shares CFD Trading?

Canopy Growth Shares CFD trading involves speculating on the price movements of Canopy Growth stock (CGC) using Contracts for Difference (CFDs).

CFDs are similar to financial contracts between you (the trader) and a CFD provider (like Plus500) to speculate on the price difference between the opening and closing price of your CFD position on Canopy Growth without owning any shares.

If you forecast the share price to gain value, you can open a “long” (buy) CFD position on Canopy Growth. Conversely if you predict that the stock price will go down, you can open a “short” (short selling Canopy Growth shares) CFD position on the stock.

Possible Advantages of Canopy Growth Shares CFD Trading

Here are some of the advantages of using CFDs to trade shares over the short-term:

• Gain exposure on both Up or Down Markets: CFDs allow you to trade on both price directions: bullish (upward movement) and bearish (downward movement) markets.
• Trade with Less Upfront Capital: CFDs are margin trades, meaning that you can control a larger position in Canopy Growth with a smaller initial investment. However, remember leverage magnifies both profits and losses.
• Convenient Online Trading: Most CFD providers offer user-friendly online platforms accessible from anywhere with an internet connection. This allows you to trade Canopy Growth shares CFDs online conveniently during market hours.
• Diversify Your Portfolio with One Platform: Many CFD providers offer a variety of tradable assets beyond stocks. With Plus500, you can trade indices, ETF, Forex, commodities, and even cryptocurrencies alongside Canopy Growth CFD shares, all on a single trading platform.

Potential Risks of Canopy Growth Shares CFD Trading

Just like with any type of trading or financial instrument, you should always be aware of the associated risks before getting started:

• Limited Ownership Rights: Unlike traditional shareholders, CFD trading doesn't grant you voting rights or any ownership stake in Canopy Growth. You're essentially speculating on the price movement, not investing in the company itself, which can be a risk for certain traders.
• Leverage: CFD trading allows using leverage, which magnifies both profits and losses. While leverage can amplify gains in favourable market conditions, it can also lead to substantial losses much faster than traditional investing when the market moves against you, which makes the risk of loss an important consideration when trading CFDs.
• Volatility and Speculation: Because the legal cannabis industry is relatively young, still evolving and increasingly competitive, Canopy Growth stock prices can experience price swings. This high volatility makes it a riskier investment for those seeking stability. Learn more about how to trade cannabis stocks.
• Overnight Fees Can Add Up: Holding CFD positions overnight often incurs rollover fees, which can eat into your potential profits depending how long you keep your CFD positions on Canopy Growth.

How to Trade CFD Canopy Growth Shares with Plus500 (A Step-by-Step Guide)

To get ready to trade Canopy Growth through Share CFDs with Plus500, here are the (non-exhaustive) steps to follow:

1. Open your trading account on Plus500.
2. To practise trading as a beginner, use a demo account first.
3. Take time to learn how the trading platform works and how to make the most out of your trading with Plus500.
4. Switch to a real trading account when you’re ready to trade Canopy Growth with real money.
5. Make a deposit with your preferred payment method whose availability depends on your localisation.
6. Find ‘Canopy Growth’ on the trading platform.
7. To trade with Plus500, open a buy trading order if you think the price is going to go up, or a short trading order if you believe the stock is going to go down.
8. Determine the number of Canopy Growth shares you want to buy.
9. Use money and risk management tools to protect your capital in unfavourable markets, such as stop-loss, trailing stop, guaranteed stop and take-profit orders.
10. When you’re sure your order is complete, click on ‘Buy’ or ‘Sell’ to open your CFD position on Canopy Growth.
11. Objectively evaluate your trading by monitoring your position, and maybe keep a trading journal to potentially develop your trading execution skills.

Canopy Growth Price & Trading: Frequently Asked Questions (FAQs):

When can I trade Canopy Growth shares?

Retail traders can trade Canopy Growth shares on the Canadian and American markets during standard North American stock trading hours, Monday to Friday, from 9:30 am to 4:00 pm Eastern Time (ET) (between 1:30 PM GMT and 8:00 PM GMT)*.

*CFDs trading hours may differ on Plus500.

Who are Canopy Growth’s main competitors?

Cronos Group (CRON), Aurora Cannabis (ACB), and Tilray Brands (TLRY) are 3 of Canopy Growth’s most important competitors as of 2024.

Why did Canopy Growth use a reverse stock-split in 2023?

In an effort to regain compliance with the Nasdaq listing requirements, Canopy Growth enacted a 1-for-10 reverse stock split in mid-December 2023. This means that for every 10 shares of Canopy Growth stock, they were combined into 1 new share. The primary reason for this action was to increase their share price above the minimum $1 requirement set by the Nasdaq and avoid potential delisting from the American exchange.

Does Canopy Growth distribute a dividend?

Canopy Growth is not currently paying dividends and does not anticipate doing so in the near future.

How can I trade Canopy Growth shares CFDs online over the short-term?

If you’d like to speculate on the evolution of the Canopy Growth stock price, one of the most popular ways to trade Canopy Growth over the short-term for retail traders is to use Contracts For Difference (CFDs) offered by CFD providers like Plus500. It is also possible to trade CFDs on Exchange-Traded Funds (ETFs) dedicated to the marijuana industry, as they are likely to include Canopy Growth among other stocks.