HEXO Stock Slumps on Higher Q1 Loss, But Revenue Soars

HEXO stock

HEXO stock is under pressure this morning after  HEXO Corp (TSX:HEXO) (NYSE:HEXO) reported an increased first-quarter loss.

Net Revenue Doubles, But Revenue Per Gram Falls

2019 has been an exceedingly tough year for the cannabis industry, and one of the hardest-hit companies in this regard has been HEXO Corp. Analysts were hoping for the company to deliver even a semblance of improvement in its fiscal first-quarter results today, but the results proved to be a major disappointment.

HEXO’s revenue for the quarter went up by more than 100% year-on-year; however, the company’s revenue per gram metric declined. The most worrying bit for investors is going to be the alarming rise in HEXO’s losses. The company’s net losses for the quarter soared almost five times to hit $62.4 million CAD from $12.8 million CAD in the year-ago period.

The company did not provide the quantum of its losses per share. The results naturally proved to be a shock for the market, and the decline in HEXO stock did not come as a surprise. HEXO stock plunged by as much as 4% to $2.15 USD on Monday morning, and it remains to be seen whether the declines will continue.

>> Aphria Stock Recovers 40% in a Month: Here are the Key Drivers

However, it should be pointed out that the company suffered $25.5 million CAD worth of impairment losses for impairing inventories for a variety of reasons.

While it is true that the latest quarterly results have been a massive disappointment and might make some investors reconsider their investment, it should be noted that another opportunity lies around the corner for the company. The legalization of cannabis derivatives in Canada could well prove to be the salvation that HEXO Corp may be looking for.

The company has been working on a wide range of products to take advantage of this new market and applied for approvals with Health Canada back in October. It is believed that HEXO will be able to start selling its products from December 17. This is a significant event for the company and one that could determine its near-term performance.

HEXO stock has tumbled over 42% so far this year.

>> Read More HEXO News

Featured image: Canva

If You Liked This Article Click To Share