Stephanie has been writing for The Motley Fool Canada since 2017. Stephanie is a stock lover who likes to invest for the long-term. She specializes in writing about consumer stocks, pot stocks, tech stocks, and personal finance. Stephanie received an MBA in finance and worked for National Bank of Canada. Follow her on Twitter to keep up with her latest work!
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HEXO (TSX:HEXO)(NASDAQ:HEXO) is one of the largest licensed cannabis companies in Canada. It’s okay to be bullish on the Canadian cannabis industry, but HEXO stock is not for cautious investors.
The promise of wealth in the marijuana market was fully realized just a few years ago. But after this came the COVID-19 pandemic, supply chain issues, and the disappointing rollout of Cannabis 2.0 (edibles, vapes, etc.). Among the cannabis stocks hardest hit during the decline of the cannabis industry was HEXO, a once-promising competitor in the market.
HEXO shares, valued at around $7 a year ago, can’t even stay above $1 lately. Not so long ago, the stock hovered around $0.26.
Delisting may be a possibility, as the Nasdaq stock exchange has occasionally issued delisting warnings when stocks trade below $1 for an extended period.
HEXO reports huge losses
Meanwhile, HEXO’s financial results are in shambles. During the company’s last quarter, Hexo suffered a net loss of approximately $146.6 million. That figure was around $21 million a year earlier.
The cannabis producer said third-quarter revenue rose 101% to $45.6 million from a year earlier but fell by 14% compared to the previous quarter in a context of continued competition in the Canadian market.
HEXO reported adjusted EBITDA of $18.4 million — a sharp decline from the $10.8 million loss reported in the prior-year quarter.
Clearly, HEXO is not on the right fiscal path. We can ask ourselves if the company is doing what it takes to get out of this financial misery.
To help answer this crucial question, we can check out what HEXO has been up to lately.
HEXO said its restructuring plan to streamline its structure and cut costs included cutting 450 jobs.
In financial documents, the Quebec company indicated that this staff reduction would result in annual savings of $30.6 million and aims to simplify its organizational structure so that costs are more closely aligned with the business’s size.
The company’s latest management discussion and analysis document indicates that most of the reductions will be achieved with less reliance on external consultants, a new information technology platform, and synergies discovered through recent acquisitions.
HEXO will close a processing and manufacturing facility in Belleville, Ontario by the end of July.
Unfortunately, approximately 230 employees will lose their jobs at this factory.
So, what else did HEXO do? Of course, the company is launching a stock market program that will allow HEXO to issue and sell up to $40 million (or the equivalent in Canadian currency) of stock. The obvious concern here is stock dilution.
What to do with HEXO stock
Overall, HEXO is in dire financial straits, and issuing stock is unlikely to be an effective long-term solution. Ultimately, HEXO will have to prove its viability as a business. The road to recovery, if it actually happens, will not be easy.
As HEXO stock could continue its incessant fall, potential investors should simply avoid it altogether and look for a better risk/reward profile elsewhere.
Should I buy or sell HEXO stock right now? 2 Wall Street equities research analysts have issued "buy," "hold," and "sell" ratings for HEXO in the last year. There are currently 2 hold ratings for the stock. The consensus among Wall Street equities research analysts is that investors should "hold" HEXO shares.
The 4 analysts offering 12-month price forecasts for Hexo Corp have a median target of 1.18, with a high estimate of 1.26 and a low estimate of 1.11. The median estimate represents a -14.79% decrease from the last price of 1.39.
The financial health and growth prospects of HEXO, demonstrate its potential to underperform the market. It currently has a Growth Score of A. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of B.
Other factors taken into account include analysis of liquidity, revenue patterns, R&D expenses, and commitments, as well as public headlines and social sentiment. Based on the latest financial disclosure, Hexo Corp has a Probability Of Bankruptcy of 78%.
Tilray to strike US$250M deal to buy Hexo: Sources. Tilray Brands Inc. is acquiring rival Canadian cannabis producer Hexo Corp. in a deal worth about US$229 million on Monday in its latest move to strengthen its position as the leading legal marijuana company in Canada.
US-listed shares of Hexo Corporation tumbled as Tilray Brands plans to buy the fellow cannabis company in an all-share deal worth about $56 million, with an offer price less than the stock's market value prior to the announcement.
Mirae Asset Global Investments Co Ltd is the largest individual Hexo shareholder, owning 1.23M shares representing 2.87% of the company. Mirae Asset Global Investments Co Ltd's Hexo shares are currently valued at $1.75M.
The most recent stock split occured on December 19th, 2022. One HEXO share bought prior to December 23rd, 2020 would equal to 0.017857142857143 HEXO shares today.
The main reason Hexo took a bath is because it's about to launch another in an ever-lengthening series of secondary stock issues. This latest model is taking the form of an at-the-market offering, under which it will selll up to $40 million in fresh common stock.
We manufacture and sell CBD Powered by HEXO® products in 17 states in the U.S. in partnership with Molson Coors and have taken HEXO international with our medical cannabis product offerings. ...
The arrangement will see Tilray issue 0.4352 shares of its stock for each outstanding Hexo share. Tilray chief executive Irwin Simon positioned the deal as way to increase the company's market share, broaden their product offerings and deliver at least $25 million in additional cost savings on an annualized basis.
Is HEXO a good company to work for? HEXO has an overall rating of 2.4 out of 5, based on over 102 reviews left anonymously by employees. 21% of employees would recommend working at HEXO to a friend and 16% have a positive outlook for the business. This rating has decreased by -18% over the last 12 months.
The average price target for HEXO is $1.13. This is based on 2 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $1.17 ,the lowest forecast is $1.10.
Hexo Corp's trailing 12-month revenue is $148.1 million with a -199.2% profit margin. Year-over-year quarterly sales growth most recently was -76.5%. Analysts expect adjusted earnings to reach $-0.440 per share for the current fiscal year. Hexo Corp does not currently pay a dividend.
HEXO's second split took place on December 19, 2022. This was a 1 for 14 reverse split, meaning for each 14 shares of HEXO owned pre-split, the shareholder now owned 1 share. ...
Scalable and consistent, Powered by HEXO™ is the quality behind award-winning products. HEXO is an award-winning cannabis brand that has earned a reputation for innovative cannabis products.
The big drop in Hexo shares was because Tilray is buying that company for about $56 million, while Hexo was trading at a market cap of over $70 million prior to the announced deal. For a bit more perspective, though, Hexo shares had surged higher prior to the announcement.
What happened. Shares of Canadian cannabis company Hexo (HEXO -4.67%) soared at the open Thursday after it and peer Tilray announced plans for a new strategic partnership.
A reverse stock split can be a great way to increase the value of your stock. It works by having a company reduces the number of outstanding shares, making each share worth more money so investors are encouraged to purchase them.
If a company you invest in announces a reverse stock split, you might wonder how to profit and if you should sell or buy more stocks. The split itself won't impact you, as your investment value will remain the same even if the individual stocks are worth more.
A reverse stock split has no immediate effect on the company's value, as its market capitalization remains the same after it's executed. However, it often leads to a drop in the stock's market price as investors see it as a sign of financial weakness.
Introduction: My name is Greg Kuvalis, I am a witty, spotless, beautiful, charming, delightful, thankful, beautiful person who loves writing and wants to share my knowledge and understanding with you.
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