Why Hexo is up 7% today

What happened

Shares of Hexo (NASDAQ:HEXO) are up 7% in morning trading on Monday, hitting $0.67 per share at 11:30 a.m. ET, with no particular news for the company. However, today is a big enough day for other pots Sundial producers (NASDAQ: SNDL) as it faces imminent delisting from the Nasdaq stock exchange for failing to maintain a stock price above $1 per share.

Hexo received a similar notice from the exchange last week and now has six months to comply.

Image source: Getty Images.

So what

Unlike Sundial, which got caught up in the stock market trading frenzy a year ago, Hexo has gone into its own business. Marijuana stock maintains overall market share leader in Canada with 14.6% share, up from No. 2 Tilray, which holds a 12.5% ​​share. It also holds the No. 1 position in a number of industry segments, including beverages, capsules, and oils.

Hexo’s joint venture with Molson Coors Beveragescalled Truss Beverage, also holds the top spot in cannabis-infused beverages, with a 40% market share.

Yet it is still operating at a significant loss, with operating losses totaling more than $155 million last quarter while posting net losses of $0.46 per share.

Now what

When Sundial Growers received its ultimatum to raise its stock price last August, it did nothing. Often, companies in similar situations will perform a stock split to artificially increase their stock price. He chose not to. But today is the deadline for deregistration.

There’s no doubt that it will start trading in the over-the-counter market, often referred to as the pink sheets, if it is delisted, but it portends what could happen to Hexo if its stock price doesn’t. not increase by 50% by the end of July.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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