HEXO Stock Feeling the Burden of Cannabis Industry Struggles

HEXO Stock

HEXO Corp (TSX:HEXO) (NYSE:HEXO) is one company that has really felt the struggle of the industry’s summer slump, with HEXO stock having dropped over 50% since April.

The Canadian cannabis market has really underwhelmed since legalization last October. As a result of numerous regulatory scandals involving former industry darling child CannTrust Holdings (TSX:TRST) (NYSE:CTST), as well as underwhelming consumer demand and a struggle to post profits for a lot of firms, the “green rush” just hasn’t really lived up to expectations. HEXO stock is one particular stock that reflects these difficulties better than any.

HEXO Stock Dropped Following Q3 Results

HEXO Corp posted its Q3 results in June, and these results did little to boost investor optimism. With analysts expecting the firm to return revenue of $14 million CAD, the company undershot this with revenue reported to be $13 million CAD. This disappointment was compounded with considerably worse than expected quarterly losses of $7.75 million CAD compared to $1.97 million CAD from the same quarter last year. HEXO stock dropped 8% in light of these results.

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Lack of Corporate Leadership in the Industry

A lack of corporate leadership in the market has done little to help stocks. In the early days of legalization, CannTrust was one of a handful of companies singled out as a potential market trailblazer; however, a series of regulatory scandals involving unlicensed growing rooms almost wiped 80% from its share value. This caused a ripple effect in the market as investors lost a degree of confidence in the potential of the market.

In a further shake-up, HEXO Corp co-founder and Chief Brand Officer Adam Miron announced he was stepping down from his position, but would retain his position on the board. HEXO stock continued to slump in the days following this announcement.

HEXO is expected to post its Q4 results in September, and with HEXO shares still on a downward trajectory, investors will be hoping for strong results to help halt the slide.

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