Will 2021 Be a Ray of Hope for HEXO?
The popularity of cannabis players like Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) means other good growth stocks in the industry can sometimes be overlooked. Canada-based HEXO (NYSE: HEXO) is basically in the same boat as Aurora Cannabis, but investors remain focused on Aurora, which gained big name recognition when it made some investors millionaires by riding the wave of Canadian cannabis legalization in 2018.
Even though cannabis sales in the country were sky-high in 2020, Canadian companies failed to see a drastic surge in revenue because of various industry headwinds. Regulatory challenges delayed the opening of legal stores, for example. HEXO's lower revenue growth and failure to achieve profitability dragged down its stock price last year to a point that it traded below $1, which is against trading compliance rules. It even received a delisting warning from the New York Stock Exchange in May 2020. Similar to Aurora, HEXO opted for a 1-for-4 reverse stock split to boost its stock price and save itself from getting delisted. (Aurora's 1-for-12 reverse split took place in May.)
Management at HEXO is making an effort to boost its revenue in the calendar year 2021 by taking advantage of the ongoing cannabis boom, as well as the launch of new recreational products that are in huge demand. While many investors remain focused on bigger players like Aurora, recent second-quarter fiscal 2021 results showed some positive signs for HEXO. Let's take a look at how its 2021 is shaping up.
Source Fool.com
