The stock of HEXO (TSX:HEXO)(NASDAQ:HEXO) is in free fall, and there is little chance that it will recover soon.
Company Overview
HEXO Corp. (NASDAQ: HEXO) is a major Canadian cannabis firm that manufactures and distributes cannabis products for the medicinal and recreational markets. With its numerous brands, the firm offers a diverse range of items such as dried flowers, oils, foods, and drinks.
HEXO has two approved production facilities in Quebec and Ontario, as well as a collaboration with Molson Coors Canada to produce cannabis-infused drinks. The firm is also expanding its operations into the United States by acquiring a majority position in a Colorado-based cannabis company, which will allow it to enter the fast-developing U.S. market.
What happened ?
Just a few years ago was the promise of profit in the marijuana sector completely realized. Nevertheless, the COVID-19 epidemic, supply chain difficulties, and the poor deployment of Cannabis 2.0 followed (edibles, vapes, etc.). HEXO, a once-promising rival in the market, was among the cannabis companies most impacted during the cannabis industry’s downturn.
HEXO shares, which were worth approximately $7 a year ago, have struggled to keep above $1 recently. Not long ago, the stock was trading about $0.26.
However, the market capitalization of HEXO has fallen below $100 million.
Delisting is a possibility, since the Nasdaq stock market has issued delisting warnings on occasion when equities trade below $1 for a lengthy period of time.
However, HEXO’s financial performance have been a disaster. Hexo reported a net loss of around $146.6 million in the most recent quarter. A year ago, the sum was roughly $21 million.
The cannabis manufacturer claimed third-quarter sales increased 101% year on year to $45.6 million, but declined 14% from the prior quarter due to persistent competition in the Canadian market.
HEXO reported adjusted EBITDA of $18.4 million, a significant decrease over the prior-year quarter’s loss of $10.8 million.
HEXO is clearly not on the proper financial track. We might question ourselves if the corporation is doing all possible to get out of this financial bind.
However, HEXO’s financial performance have been a disaster. Hexo reported a net loss of around $146.6 million in the most recent quarter. A year ago, the sum was roughly $21 million.
The cannabis manufacturer claimed third-quarter sales increased 101% year on year to $45.6 million, but declined 14% from the prior quarter due to persistent competition in the Canadian market.
HEXO reported adjusted EBITDA of $18.4 million, a significant decrease over the prior-year quarter’s loss of $10.8 million.
HEXO is clearly not on the proper financial track. We might question ourselves if the corporation is doing all possible to get out of this financial bind.
What should we do?
Overall, HEXO is in serious financial trouble, and issuing shares is unlikely to be a long-term solution. Finally, HEXO will have to demonstrate its commercial viability. The path to recovery, if it occurs at all, will be difficult.
As HEXO stock continues to plummet, potential investors should avoid it entirely and hunt for a better risk/reward profile elsewhere.
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