HEXO stock is continuing to trade down this week after HEXO Corp (TSX:HEXO) (NYSE:HEXO) announced plans to raise US$20 million via a direct stock offering.
Second Offering in a Month
The offering announced on January 17 is the second time in the last month that the Canadian cannabis firm has sought to raise financing by issuing shares, and the terms of this round appear to be mostly identical to the December offering. HEXO Corp will issue 11,976,048 common shares at a price of US$1.67 per share. Each common share will also come with a half warrant, with 5,988,024 common share purchase warrants being issued. Each warrant entitles the holder to purchase a common share of HEXO stock at a price of US$2.45 for a period of five years.
HEXO expects the offering to close by January 22, with all funds raised being put towards research and development expenses and working capital purposes. The previous offering, announced December 26, saw HEXO Corp issue 14.97 million shares at a price of US$1.67 per share, which represented an approximate discount of 15% from its December 24 closing price.
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Mixed Bag for HEXO Stock
With HEXO stock falling over 60% in the last year, the decision to issue additional shares comes just a few weeks after the company published its fiscal Q1 results, which saw revenue rocket over 100% year-on-year but also saw a net loss of C$62.4 million, almost five times greater than the C$12.8 million loss reported a year previously. Analysts were skeptical of the timing of the previous round of financing, with one suggesting that raising funds in such a manner "is not normally done from a position of strength.”
However, HEXO shares enjoyed a slight rally in the first half of last week, jumping nearly 40% after it was announced that a bipartisan group of lawmakers in the US House of Representatives had introduced a bill to allow CBD to be sold as a dietary supplement, essentially circumventing the lengthy regulatory approval process of the FDA.
HEXO stock is currently trading for $1.95, down about 20% since last Wednesday.
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