HEXO Corp is a consumer packaged goods cannabis company that creates and distributes products to serve the global cannabis market. As one of the largest licensed cannabis companies in Canada, HEXO Corp operates with 1.8 million sq. ft of facilities in Ontario and Quebec and a foothold in Greece to establish a Eurozone processing, production and distribution centre. The company was incorporated in 2013 under the name The Hydropothecary Corporation. The company was created to meet the needs of the Canadian medical cannabis market. After the creation of the legalized market in 2018, the company became HEXO Corp, for both adult-use (recreational) and medical markets.
Shares of Hexo Corp (NYSEMKT: HEXO) dropped 8.5% in Thursday trading after the company reported fiscal Q3 2019 earnings that beat expectations, although sales fell short. Hexo was expected to report a $0.05 per-share loss for the quarter. Hexo surprised investors with a loss of only $0.04 per share. Sales decreased to $13 million CAD, almost $2 million less than analysts hoped for ($14.8 million). This is likely the reason why the stock is down today.
Sales did not meet expectations. But, they were still up compared to the year-ago quarter (nearly 1,000%). Company reported $1.2 million in "net revenue from sale of goods" in the year-ago quarter. Falling prices for marijuana in Canada may have affected sales. Recreational pot prices decreased 9% over the past 3 months to $5.29 per gram. Medical marijuana prices are slightly down at $9.11 per gram. Investors are not looking for their companies to earn profits this early. They are more concerned about production rates and market share. Hexo predicts that it will double revenue in Q4 2019 and increase annual sales 100 times from 2018 to 2020 ($4 million to $400 million). The long road to growth remains ahead.