Today, I want to look at a smaller cannabis stock: HEXO Corp. (NYSE: HEXO).
Thanks to Wayne, who left a comment requesting a deep dive into this company on YouTube!
About HEXO Corp.
HEXO Corp. is based in Canada. It produces, markets and sells cannabis.
It claims to be one of the “largest licensed cannabis companies in Canada,” with nearly 2 million square feet of facilities in Ontario and Quebec.
And HEXO has established a processing, production and distribution center in Greece in an effort to get a toehold in the eurozone.
The company operates in both the adult-use and medical cannabis spaces.
The company has been in operation since 2013 and is headquartered in Gatineau, Quebec, Canada.
HEXO Stock Headwinds
For the first part of 2020, the company struggled.
It faced the same headwinds that hit Aurora Cannabis Inc. (NYSE: ACB) — overproduction.
In the first nine months of the fiscal year, the company sold just 25,000 kilograms of its 90,000 kilograms of annual production.
That led the company to write off nearly $100 million in goodwill, around $31 million in unsold inventory and another $80 million in asset impairments in January.
Be sure to check out today’s video for the full story on HEXO’s financials.
Partnership With Molson Coors
There’s some encouraging news about HEXO:
Molson Coors and HEXO Corp Expand Partnership with Joint Venture in Colorado https://t.co/kv0W1Bwn21
Molson Coors et HEXO Corp renforcent leur collaboration, établissent une coentreprise au Colorado https://t.co/AywKZcxcXj pic.twitter.com/sf3jSKuiGq
— HEXO Corp (@Hexocorp) April 15, 2020
- In April, it entered into a partnership with Molson Coors to research and develop non-alcoholic CBD beverages in Colorado.
- I mentioned the expansion into the eurozone by establishing a facility in Greece.
- The price of a gram of adult-use cannabis has dropped from $5.29 in April 2019 to $3.19 in April 2020. But HEXO’s sales went from 2,759 grams for the quarter ending April 2019 to 9,338 for the quarter ending April 2020.
- HEXO has vastly cut its marketing and promotion spend.
- The company has launched its Veryvell™ line of water-soluble cannabis extract drops in Canada. It was the first product offering under its partnership with Molson Coors Canada (different from the venture in Colorado).
HEXO Stock: Recent Moves
As for its share price, HEXO has seen a lot of lateral trading since June.
Its price has barely moved from between $0.60 and $0.70 per share since topping out at $1.09 on June 8:
HEXO Stock’s Fall From Grace
So, for the full story on HEXO — including whether it’s a “buy-and-hold” stock, one to run screaming from, or a speculation … make sure to watch my Marijuana Market Update!
And keep an eye on your inbox next week! I’m in the process of adding a stock to my Cannabis Watchlist.
Right now, two of our stocks — PerkinElmer Inc. (NYSE: PKI) and Schweitzer-Mauduit International Inc. (NYSE: SWM) — are up since we added them to the list at the beginning of September.
Again, my team and I love the feedback we’re getting on our YouTube channel and through email!
Feel free to send comments, questions and stocks you want us to examine to firstname.lastname@example.org — or leave a comment on YouTube!
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Coming up this week, we’ll have more on The Bull & The Bear podcast and our Money & Markets Week Ahead, so stay tuned.
For instance, we just posted a new video to our playlist, The Bull & The Bear:
Until next time…
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.