KSHB stock is the biggest loser in the cannabis sector in September, with a slump of 58%. On Thursday, KushCo stock had one of the biggest one-day falls after KushCo Holdings Inc. (OTCQB:KSHB) announced a secondary offering priced at a steeper discount to the market price.
The past few months have not been a particularly great time for the cannabis sector, and even now, some companies are struggling for a variety of reasons. One company that is currently struggling is KushCo Holdings. The company is not a cannabis producer but instead makes ancillary products meant for the cannabis industry, and over the past months, the company has been struggling.
On Thursday KushCo announced that it was going to make a secondary offering of its shares and the news was not well received by investors. KSHB stock tanked by as much as 36.5% to hit $1.71.
KushCo announced that it was going to make a secondary offering of 17.2 million units to a pool of investors. The units are going to be made up of one share worth $1.75 and a warrant that allows the investors half a share. The company stated that the offering is going to raise as much as $30.1 million before expenses and other associated costs are accounted for.
KSHB stock is down 6.50% at $1.60 in Friday's trading session and made a new low of $1.59 earlier in the session.
There has been a worldwide backlash against vaping products recently, and that has piled immense pressure on KushCo Holdings in September. The latest announcement seems to have made investors quite worried about the company’s financial situation.
Only in August, the company had managed to get a credit line worth $50 million, and the latest offering perhaps indicates that KushCo is running out of cash pretty fast. During the course of the first three quarters of 2019, the company has lost a total of $62.9 million in free cash flow, and that is a clear indication of the sort of problems that it has run into.
The current worldwide backlash against vaping products has also made KushCo Holdings a far less attractive company to invest in, and that has possibly been one of the biggest reasons behind the rapid decline in September. However, the cash flow problem is definitely another factor for KSHB stock investors.
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