Is HEXO Stock A Good Buy or Ignore Right Now? (TSX:HEXO) (NYSE:HEXO)

The stock of HEXO Corp (TSX:HEXO) (NYSE:HEXO) has been down by 57% since the beginning of the year. It has become further a mess post the announcement of a delay in the release of the earnings report of fiscal 2020 Q2. The delay in the release was attributed to the failure of the company to file by the given deadline the ‘interim financial statements and related management’s discussion and analysis. Moreover, this would be the second time that the company has delayed the release of its financial report- the first time being with fiscal 2019’s Q4 earnings report delay.

Key Analysis

There are more troubles and challenges for the company than this delay, and one of them is the continued unimpressive financial results. The company had reported a net loss of 298.2 million Canadian dollars in the second quarter. This was the deepest quarterly loss reported by the company. The company also had, however, reported a sequential increase in its net revenue by 17% to 17 million Canadian dollars. However, the company failed to satisfy the investors, and the shares of the company plunged.

To add to the woes of the company, recently, Hexo has been leaning more and more towards dilutive forms of financing. The company had managed to raise 70 million Canadian dollars by way of issuing convertible debentures. This funding round had started in October and closed down in December. Then, again in the latter part of December, Hexo issued new shares worth 25 million Canadian dollars, which went on till early January. And then, lastly, in January, the company again raised 20 million Canadian dollars by way of new shares issuance which closed on January 22.

The company came forward, claiming that the ‘’forecasted cash flows would require additional capitalization’’ in its press release. This indicates that the company might not be done with share dilution- which will keep pushing down the shares of the company in the future.

About Travis Garlick 1821 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.