Zenabis Stock Turns Volatile Despite CEO’s Note About the Rights Issue

Zenabis stock

Zenabis stock has been showing volatile movement this week after the recent slump. The stock soared 15% after Zenabis Global’s (TSX:ZENA) (OTCPK:ZBISF) CEO spoke to investors at a conference call with shareholders. However, the stock has resumed the downtrend this morning and is down 13%.

Rights Offering Making a Lot of Trouble

The past few months have not been a great time for the cannabis industry, and many of the companies in the sector have had their fair share of struggles. In that regard, the situation has been the same for the Canadian cannabis producer Zenabis Global. Recently the company announced that it was going to make a rights offering in order to raise more capital. However, this decision was given the thumbs down by its investors in the market, leading to an alarming drop in Zenabis stock.

Yesterday, the company hosted a conference call where Chief Executive Officer Andrew Grieve addressed investor concerns.

The CEO defended the company’s decision and also pointed out the fact that companies like Zenabis are suffering due to the continued presence of illegal producers.

Zenabis stock is down 13% at $0.19.

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Grieve went on to state that it was in the best interests of all shareholders for the company to not go down the path of raising capital through non-traditional means. In other words, the rights issue is still the best option for the company, according to the CEO. He also pointed out that Zenabis Global still trades at a discount when compared to its peers.

At the time of the announcement, Zenabis stated that it was going to offer its shares for $0.15 each. The reason behind the ire expressed by the company’s shareholders was that the price reflected a steep discount of as much as 70% on the Zenabis stock price at the time.

Analysts believe that due to the declining value of the shares and the difficult market conditions, Zenabis Global is possibly conducting the rights issue in order to ward off a hostile takeover attempt.

A rights issue of this nature allows existing shareholders to buy up more shares of the company at a steep discount. That being said, it should be noted that there have not been any reports that have indicated that any entity is interested in acquiring Zenabis.

Zenabis stock is the biggest loser in the cannabis sector this year, with a slump of over 94%.

>> Read More Zenabis News

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