HEXO stock has been one of the worst-performing stocks in the cannabis sector over the past six months. Let's find out what's going on with HEXO Corp (TSX:HEXO) (NYSE:HEXO).
Over the past six months, HEXO Corp has gone through a fair bit of turmoil. Even with all that's been going on, however, many analysts still believe that there is enormous long-term potential in the cannabis sector—but does that belief extend to HEXO stock?
Earlier this year, the company acquired Newstrike Brands, and at the time, it stated that it expects its revenue to hit $400 million in 2020. These projections created optimism about the continued growth for HEXO, but last month, the company cut its revenue estimates for Q4 2019 to $15.5 million–$16.5 million. That's down from around $26 million. The downgrade came as a shock to the market and HEXO stock investors. Moreover, the company went on to project that in Q1 2020, it expects to generate revenue in the $14 million to $18 million range.
HEXO stock is down 3.77% at $2.04 on the NYSE in Wednesday's trading session.
It goes without saying that growing revenue has been a challenge, and recently, HEXO Corp revealed that it had received a cash injection of $70 million from company insiders. While HEXO remains the largest producer in Quebec, it is struggling to compete in the other major provinces of Canada at this point.
The company is currently trading at $2.04 a share on the NYSE, and while the situation remains tough, analysts believe that HEXO could eventually be acquired by another company. A larger competitor in Canada could eventually take it over, or its partner Molson Coors Beverages (NYSE:TAP), could decide to acquire the company at some point.
What do you think?
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