The cannabis sector took a bit of a beating on the markets Thursday, with some of the biggest names in the industry laying claim to six of the top 10 worst performing stocks for the day on the S&P/TSX Composite.
Leading the biggest losers was Hexo Corp (TSX:HEXO), which dropped 8.21%; followed by Cronos Group Inc (TSX:CRON), which lost 4.62%; and CannTrust Holdings Inc (TSX:TRST), which was down 4.16%; and Aphria Inc (TSX:APHA), which slipped 3.59%. Aurora Cannabis Inc (TSX:ACB) and Canopy Growth Corp (TSX:WEED). rounded out the top list of laggers, shedding 2.71% and 2.31%, respectively.
On Friday, the slide continues, although only five of the previous day’s biggest cannabis laggers are keeping their position in the top 10 of the worst performing stocks on the S&P/TSX on the day.
Hexo continues to lose ground Friday, two days after unveiling its third-quarter earnings. The Quebec-based cannabis grower saw its revenues increase, but came in short compared to analysts’ expectations. Hexo sales for the quarter were $13 million, up nearly 1,000% compared to the same quarter the year before, but below what was anticipated.
The question now becomes: What’s next?
And this is where Hexo made bold predictions. It expects to double revenue next quarter and increase sales to $400 million by the end of 2020, a substantial jump from the $4 million it registered in Q4 2018. A big part of the anticipated growth is linked to the company’s agreements to supply hemp and CBD products that will be used in edibles, which will become legal in Canada later this year.
All to say, the dip in share price could be well timed. But will it drop a little more? Jeffries analyst Owen Bennett earlier this week maintained his “sell” position on Hexo.
In the past year, Hexo shares have increased 56.83%