With an average daily trading volume of 4.7 million shares, HEXO stock is one of the most popular cannabis trades out there. That volume reflects the last three months. However, in the same period, shares have dropped 30%. While investors continue to trade at a furious rate, the question moving forward is whether or not you should get involved with HEXO Corp (TSX:HEXO) (NYSE:HEXO).
HEXO Stock
From April's high of $8.28 USD, shares of this Quebec-based company have dropped over 30%. Currently, they are valued at $5.36 USD on the NYSE American.
The company's recent Q3 results (released June 12) didn't help matters. Shares dropped over 8% immediately after as the company disappointed with a "basic net loss per share that widened to 0.04 CAD [...] from 0.01 CAD per share a year ago, weighed down by higher operating expenses and taxes."
Further, HEXO's net sales, while jumping significantly from $1.2 million CAD in the year-ago period to $13 million CAD now, still missed analysts' expectations of $14.4 million CAD.
Overall, with operational expenses rising, and demand for HEXO's product waning in the international medical sector, HEXO stock has faltered.
Silver Lining
But is this an opportunity perhaps? For the low-price, there remains a lot of potential that investors might like here.
First of all, HEXO Corp benefits from a lot of positive analyst coverage. This is not something to be scoffed at, as, in a highly competitive market, coverage can keep companies relevant. And while the short-term prospects may appear bearish, the long-term sentiment is undoubtedly positive, with HEXO stock garnering an average "BUY" rating from 13 analysts.
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Further, the company itself still comes with three very attractive key ingredients.
It has a 30% market share in Quebec's adult-use recreational marijuana market.
In addition, the company's joint venture with Molson Coors Brewing (NYSE:TAP) to develop cannabis-infused beverages is likely to bring much stronger growth for HEXO stock in the near future.
And finally, for its small size, it already lists on a major American exchange. This offers the company the potential for sizeable investments from major institutional investors who, more often than not, won't invest in companies on the more ambiguous OTC markets.
The Takeaway
When it came to coverage, it seemed that HEXO stock was one investment that could do no wrong. So perhaps it is a good thing that HEXO Corp's shine has dimmed slightly. For one thing, no company is immune from stock dips, but for another, moving forward investors may feel more assured that hype has stopped driving this cannabis train.
What are your thoughts on HEXO stock?
Featured Image: Canva
