HEXO stock continues to move higher for the second straight session after HEXO Corp (TSX:HEXO) (NYSE:HEXO) postponed its fourth-quarter earnings release and announced a $70 million private placement.
What's Coming Next?
The cannabis sector has gone through a lot of pain over the course of the past months, and stocks of many of the better-known companies have plunged from their record highs. In that regard, HEXO Corp is no exception. However, on Wednesday, the company made a double announcement that has got the market buzzing about the company.
On Wednesday, the company announced that it was going to postpone the publication of its third-quarter financial results. It revealed that the results will now be released on October 28, and HEXO is going to host a conference call the following day.
That being said, the company made a far more important announcement as well. It stated that it has reached an agreement with its key investors, shareholders, and directors by way of which they will buy $70 million worth of debentures. Although the debentures are unsecured, they are convertible and constitute a considerable capital raise for HEXO Corp.
HEXO stock is up 2% at $2.75 on the NYSE, extending yesterday's rally of about 4%.
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Some of the members of the board, as well as the Chief Executive Officer of the company Sebastien St-Louis, are going to participate in the whole thing. HEXO stock rose after the announcement was made.
Revenue Warning is Still a Concern
However, it is important to keep in mind that HEXO stock has performed quite poorly in the month of October; so far, it has lost as much as 40% this month. On October 10, HEXO issued a revenue warning that weighed on the company’s stock and may have also led to a sector-wide plunge.
The company stated that there was going to be a revenue shortfall in the fourth quarter due to lower than expected sales. It went on to state that it was also withdrawing its financial outlook for the next year.
While the announcement led to a selloff in HEXO stock, an analyst at MKM stated that HEXO Corp is still well placed to take advantage of cannabis derivatives legalization when it hits full force in Canada later this year.
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