HEXO stock has rebounded over 45% over the past week as the cannabis sector experiences a recovery of sorts. Let's analyze the recent developments from HEXO Corp (TSX:HEXO) (NYSE:HEXO).
Why the Sudden Rebound?
The cannabis sector has gone through a lot of trouble over the past months, and many companies have seen their stock prices plunge to new depths. Like many other companies, HEXO also saw its stock falling off a cliff, and in fact, it has fallen by as much as 72% from this year's peak.
However, it seems that HEXO stock could be on a comeback trail if the remarkable 38% on Thursday is anything to go by. That being said, it should be noted that in addition to HEXO, many other major cannabis stocks gained as well.
At its peak, HEXO Corp had a valuation of $1 billion, but after the erosion in HEXO stock price, it is currently valued at $785 million. While it is not a particularly poor valuation, there are some companies that are currently much more valuable.
In 2020, HEXO expects to generate sales worth $100 million, and next year, the company expects it to go up to $250 million.
Experts also believe that HEXO Corp is going to take a radical approach in order to eventually become profitable. The company is looking to become a cannabis platform. If it is successful in doing so, then HEXO could eventually become a powerful member of the wider cannabis industry.
HEXO is going to provide its expertise and infrastructure to help companies in creating cannabis products quickly. It is a compelling business model and one that could prove to be a highly wise move in the long run.
Moreover, such a model will ensure that the company is not tied up with only one or two partners, unlike many of the other companies in the industry at this point. This is a company that should be watched closely by investors.
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