HEXO stock has been selling off in a dramatic fashion for the past three months. The stock is continually hitting a new 52-week low, which is a worrisome sign. The question now is—when will this sell-off finish? Is HEXO Corp (TSX:HEXO) (NYSE:HEXO) simply going to drop further or will this lull eventually turn around?
At present, shares are selling for $3.99 USD and are down a further 2.68% on the day. They have already lost roughly 50% since the end of April.
HEXO Stock
The larger cannabis market is selling most cannabis stocks regardless of valuations and forecasts. This provides a glimmer of hope for current investors, that the issue doesn't pertain to HEXO operations alone.
In fact, the current price may offer new investors an opportunity to build a solid position in HEXO stock in preparation of things to come.
Because it's hard to imagine HEXO stock pricing this low for much longer.
What's on the Horizon?
The company's cultivation capacity received a significant bump up to 150,000 kg when it acquired cannabis cultivator Newstrike Brands in May. The boost is notable: HEXO Corp generated only 9,800 kg of dried cannabis in fiscal Q3. The new acquisition increases quarterly cultivation to 37,500 kg.
>> Cannabis One Appoints New Members & Strengthens Its Management Team
Perhaps the most exciting potential comes from HEXO's mountain of hemp. It has roughly 200,000 kg of hemp for CBD production pegged for fiscal 2020 and has a second third-party supplier delivering another 60,000 kg of hemp for use presently.
The aim of all this hemp is to create edibles and concentrates for Canada's legalization of cannabis derivatives later in the year. It is also planning on entering eight US states next year through its line of CBD products. The company is working closely with cannabis extractor Valens GroWorks (TSXV:VGW) (OTCQB:VGWCF) to work through 50,000 kgs of its hemp next year to speed up production and comfortably meet initial demand.
Slump
HEXO stock has now dropped to below $4 per share, which will raise questions over its ability to meet targets. Further, with the sale of cannabis derivatives pushed back until mid-December, some investors will question this impact on revenue.
But the company still forecasts revenues of $400 million CAD for fiscal 2020. With a focus on gummies and premium vapes and its cannabis-infused beverages venture with Molson Coors (NYSE:TAP), the company is primed to take on the new market.
In the near-term, the stock loss might suggest an ailing company but don't let it fool you. There is a mass of potential ahead.
Featured Image: Canva
