If you are planning to gain exposure to companies such as Plug Power (NASDAQ:PLUG) and Canopy Growth (TSX:WEED), you should think twice. The two stocks are fundamentally weak and could easily turn a $100,000 investment into $0 by the end of this decade.
While both companies may offer strong upside potential, they remain unprofitable and could file for bankruptcy if they fail to gain significant traction in the next five years.
Is this TSX stock a high-risk investment?
Valued at a market cap of $592 million, Canopy Growth stock rose from $16.50 in August 2015 to $650 in October 2018. Today, it trades at $1.73 per share. Canopy Growth’s second-quarter results reveal a company making progress on turnaround efforts, but several factors make it a high-risk investment.
In fiscal Q2 (ended in September), Canopy grew its adult-use cannabis revenue in Canada by 30% year over year. Moreover, medical cannabis sales rose by 17% as insured patient registrations increased by 20%.
Canopy also exceeded cost-cutting targets, achieving $21 million in annualized savings, and narrowed its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) loss to $3 million from $6 million last year.
However, sales from Europe were down 39% due to supply chain failures and quality control issues. Flower sourced from Portugal didn’t meet standards, and internal process gaps prevented delivery from Canadian facilities to Germany.
With a negative EBITDA margin and a free cash outflow of $19 million in Q2, Canopy continues to burn cash. Analysts also forecast cumulative free cash outflows to surpass $125 million through fiscal 2028.
With $300 million in cash and $226 million in long-term debt, Canopy Growth will need to raise additional capital to cover interest expenses and its cash burn.
Proposed Canadian government changes to medical cannabis reimbursement for veterans could negatively impact the high-margin medical segment that’s been driving growth.
The cannabis industry itself remains highly volatile with pricing pressure, particularly in vape products, where competitors have engaged in aggressive price cutting.
Canopy faces ongoing challenges from U.S. tariffs, which are pressuring its Storz & Bickel vaporizer business and broader economic uncertainty that is affecting consumer sentiment. These multiple risk factors make Canopy suitable only for investors comfortable with substantial volatility and potential capital loss.
The bear case for investing in Plug Power stock
Plug Power is another loss-making company that remains a speculative investment in 2026. In Q3 2025, it reported revenue of US$177 million, with its electrolyzer business growing 46% sequentially to US$65 million.
Plug Power improved its cash burn by 50% to US$90 million. It also announced plans to monetize electricity rights and release restricted cash, expecting to generate over US$275 million in liquidity through a partnership with a data centre developer.
Alternatively, Plug Power is projected to report a free cash outflow of over US$650 million through 2027. The company has yet to achieve profitability after nearly three decades in business. Management reiterated targets for gross margin neutrality by year-end and a positive adjusted EBITDA in the second half of 2026.
While the recent US$350 million equity raise and planned asset monetization will help reduce debt, Plug has relied on continuous capital raises to stay afloat. This ongoing dilution hurts existing shareholders and raises questions about the business model’s sustainability.
Execution risks abound in the electrolyzer business, where Plug maintains a US$8 billion pipeline. These large-scale hydrogen projects often face delays, with customers taking years to reach final investment decisions. A single quarter slip on major projects can significantly impact financial results, making revenue forecasts unreliable.
The company faces intense competition in the emerging hydrogen market from well-capitalized rivals. Technology risk remains high as the industry works to prove commercial viability at scale. Regulatory uncertainty around hydrogen subsidies and clean energy policies could dramatically alter the competitive landscape.
While incoming CEO Jose Luis Crespo has deep company experience, any strategic shifts during the transition could impact execution. With negative cash flow, mounting debt obligations, and an unproven path to profitability, Plug Power represents a high-risk bet on the hydrogen economy’s future.
