HEXO stock dropped to 20% this week

Hexo Corporation works in the production, marketing, and selling of cannabis in Canada. The company works with its dedicated subsidiaries for its processes. The company’s stocks are decreasing in price and the value has substantially decreased below the level of $1 per share. The stocks got above the value of more than $1.20 per share at the beginning of the month. The upward trend didn’t continue in this month. The company planned the market facility for sale in Match 2020 followed by the strategic meet to discuss the cultivation assets.

The company’s decision for selling the Niagara facility was implemented on June 15, 2020, and the deal was closed at approx. $10.25 million. The company assured that the amount would be used for funding Ontario and Belleville facility and running the overall tasks for the corporate. The stock prices went down after the company announced a stock offering program of $34.5M. The aim was to issue the new shares with the sales executed through the New York Stock Exchange or the Toronto Stock Exchange, or the other trading platforms. The ATM (at-the-market) equity program allows HEXO for issuing the common shares to the public in the upcoming phases.

The subsidiaries of the company are making moves to attain profitability and when it will begin happening, it will continue the dilution of shareholders. The program agents are Oppenheimer & Co. Inc. in the US and AltaCorp Capital Inc. in Canada. The sale of the Niagara facility might be a way to increase the gross proceeds. The facility was planned to be sold before the corona crisis. It is not sure about the losses of HEXO but the asset cost will be accounted for the next quarter. About one year back, Newstrike Brands was acquired by HEXO.

HEXO is presently in dire need of cash flow which could lead them to dilute the shareholders. The investors need to be vigilant while thinking about buying the stock as it could pinch the short-term pain. The 52-week range of the stock is $0.34 – $5.62 and the company’s stock prices are lowering gradually in the corona crisis. The market capitalization of the company is $304.71. June had been a discouraging month for the company’s stocks and there is a reduction from $1 to $0.75 level. There could be a downward movement in the stock prices.

Traders are presuming that HEXO could be a stock to buy in the upcoming time as the company has strong basics but due to the present crisis, there have been many speculations made for the company’s futuristic position. Investors need to pay close attention to the moves of HEXO stocks. The implied volatility of the stocks is higher and it is expected that the investors could expect a big move in the underlying stocks moving in different directions. The trade might develop but the traders would look for significant profits by buying and selling HEXO stocks.

About Travis Garlick 1767 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.