In recent times, the Canadian cannabis industry has gone through a lot of difficulties, and most of the companies have been suffering. One of the companies that stand out in this regard is HEXO Corp (TSX:HEXO) (NYSE:HEXO). The company seemed to have turned a corner after it signed its largest wholesale supply agreement with Quebec.
However, that turned out to be a false dawn as other problems cropped up, and the stock is now trading at $0.50 a share. As a result, the Hexo stock is possibly one of the more avoidable cannabis stocks in the market at this point.
Like many of the other companies in the industry, Hexo has also been scaling back its operations due to a lack of cash. For instance, the operations at the Niagara facility, which Hexo took over after the acquisition of Newstrike Brands, have been halted. The company is looking to close it down permanently and eventually sell it. However, that is not all. Hexo has also scaled down its production activities by as much as 33% over the course of the past six months and laid off 200 employees last year. In order to stay afloat, the company has had to make offerings of its stock.
Recently, Hexo raised C$46 million by selling 60 million shares, and those shares came with warrants with an exercise price set at C$0.46. These sorts of machinations from the company have further eroded the value of its stock. In this regard, it is also important to point out that the company has also got a warning from the New York Stock Exchange since its shares had traded for less than $1 for a 30 day trading period. The company has not rectified the situation yet, and unless the share doubles in price, Hexo might need to opt for a reverse split in order to stay listed. Stocks generally perform poorly after a reverse stock split.