Stock Market News: Canopy Takes a Hit; Walmart's Happy for the Holidays

The string of fairly muted movements in stock prices continued on Thursday morning. Investors stayed in a holding pattern as they await more definitive news on vital issues like trade, geopolitics, and macroeconomic conditions. As of 11 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 31 points to 27,753. The S&P 500 (SNPINDEX:^GSPC) fell 1 point to 3,093, and the Nasdaq Composite (NASDAQINDEX:^IXIC) moved lower by 18 points to 8,464.

Yet there was still plenty going on at the individual stock level. Canopy Growth (NYSE:CGC) saw its shares fall sharply following the latest read on the cannabis company’s progress as a leader in the marijuana industry. Meanwhile, Walmart (NYSE:WMT) announced quarterly results and pointed toward the coming holiday season as a key period for the retail giant.

Canopy gets smoked

Shares of Canopy Growth were down 17% following the release of the Canadian marijuana company’s fiscal second-quarter financial report. Canopy did produce considerable growth from year-ago levels, but investors were largely disappointed with its more recent pace of revenue gains.

Image source: Canopy Growth.

Canopy’s gross revenue from cannabis more than quadrupled year over year with the introduction of recreational cannabis on the Canadian market. However, sales were up just 2% from the fiscal first quarter. A large part of the problem has come from Canadian provinces that have cut back on purchases due to extensive unsold inventories of marijuana products. In addition, retail stores aren’t opening as quickly as anticipated.

CEO Mark Zekulin believes the issues should get resolved in time. Yet that didn’t keep the company from having to take a sizable restructuring charge in response to a review of its softgel and cannabis-derived oil product portfolio.

Investors are pessimistic about the near-term prospects for the marijuana industry, and Canopy Growth’s results only confirmed that assessment. It’s entirely possible that Canopy and its peers will get back on a healthier upward track given enough time, but it’s far from clear how long shareholders will have to wait for that to happen.

Walmart is already celebrating the holidays

Shares of Walmart were up 1% after the retail behemoth gave a favorable report for the third quarter of 2019. Revenue increased 2.5% from the year-ago period on a 3.2% rise in comparable-store sales, and although operating income was down 5% year over year due to an impairment charge, earnings were better than most investors had expected.

E-commerce has been an important part of Walmart’s efforts lately, and a 41% rise in e-commerce sales pointed to the success of its strategic vision there. Online grocery sales growth was particularly noteworthy, with its Delivery Unlimited grocery delivery membership option now available in 1,400 stores across the U.S., and record sales in India came largely from last year’s acquisition of Flipkart. Walmart also launched InHome Delivery in three domestic markets with the hope of delivering both groceries and other essential items directly into people’s homes.

Walmart has high hopes for the immediate future. The company boosted its earnings guidance for the full year, now expecting a slight increase compared to last year’s bottom line on an adjusted basis. As CEO Doug McMillon put it, “We’re prepared for a good holiday season.”

Investors took the news as a positive for the health of the American consumer, and that’s likely to prove to be an important part of how resilient the U.S. economy is overall. If things go as well for Walmart as the company expects, then today’s modest gain in the share price could be just the beginning.