As the chart indicates, Canopy Growth Corporation (CGC) shares closed below $5 yesterday for the first time since late March 2024.

In the spring, the stock price of the cannabis production and distribution company surged amid expectations that the US Drug Enforcement Administration (DEA) might downgrade marijuana from a Schedule I to a Schedule III substance.

The decision was indeed made on 30 April, which saw CGC’s share price peak above $14, as investors anticipated that the move would: → accelerate the legalisation of marijuana for both medical and recreational use; → reduce penalties for illegal marijuana trade; → boost profits for companies like Canopy Growth Corporation.

However, the reality was different. The Q2 earnings report released on 9 August showed that Canopy Growth Corporation's (CGC) actual performance fell short of analysts' expectations. For instance, gross revenue was $48.3 million (compared to the forecast of $51.2 million and Q1 revenue of $53.7 million).

Despite favourable conditions, including a rising stock market in 2024, Canopy Growth Corporation's (CGC) shares have disappointed.

A technical analysis of the daily chart for Canopy Growth Corporation (CGC) shows that the stock is trading within a downward channel (marked in red), with the following observations:

→ Low volatility over the summer (highlighted by an oval) can be interpreted as buyers and sellers agreeing on the stock's fair value, which is typically seen near the median line.

→ Attempts at growth (indicated by arrows) encountered resistance from the upper boundary (marked with arrows) and were unsuccessful. It's possible that the next contact with the channel's boundary will occur on the lower side.

According to TipRanks, none of the analysts recommend buying CGC stock, although their average price target for CGC is $5.93 over the next 12 months – over 20% higher than current levels.

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