Zenabis stock is sinking on Thursday after the company announced that it was laying off a further 22% of its staff, roughly 175 positions, as well as putting its Delta, BC facility on the market as part of the latest round of cost-cutting measures.
Zenabis Stock at All-Time Low
In a corporate update released after the bell on Wednesday, Zenabis Global (TSX:ZENA) (OTCPK:ZBISF) identified a number of "departmental restructuring initiatives" it will undertake in order to turn cash-flow positive by the end of the year. The biggest cost-cutting measure is the reduction of the company's corporate workforce at its Vancouver, BC, office by 22%. The announcement comes just two months after the last round of layoffs at the troubled pot producer when 10% of its Vancouver staff were let go. Zenabis shares are currently trading at an all-time low of $0.06.
One of the main issues that have landed the company in this situation was the massive capital expenditure on building out production facilities in the early days of legalization, with underwhelming consumer demand now rendering these plants excessive to the needs of the market. As a result, Zenabis Global has announced that it will put its Delta, BC, location on the market. The facility has a limited production capacity of just 100 kilograms and so was deemed a non-core asset. Zenabis shares are down almost 15% at the time of writing, with the markets in turmoil.
Kevin Coft, Chief Executive Officer of Zenabis Global, said, "With our collective efforts, we continue to execute on our plan with a focus to achieve operational excellence as well as become cash flow positive in 2020. Various measures are being taken to ensure continued execution of our plans, which include expanding our exports into the European medical cannabis market and a rationalization of our cost structure."
End of the Line Fast Approaching?
Zenabis stock has been one of the worst-performing pot stocks since legalization in October 2018. Trading around the $3.80 mark back then, Zenabis climbed to a peak of $6.75 by November 2018 when market optimism was in abundance. Since then, the stock has been almost completely wiped out, with restructuring efforts showing no signs of hope for the firm so far. As the world teeters on the verge of a global recession following the outbreak of the coronavirus, Zenabis Global may be on its last legs.
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