Short interest went up almost 50% on this company last week - why? They released a lackluster earnings that fails to provide proper substance on how they intend to achieve profitability....
From the Globeandmail: Cannabis producer
Hexo Corp. (
HEXO-T +2.80%increase) also had a big jump, rising to 18.7 per cent of float short from 13 per cent.
Shorts need buyers and HEXO just whiffed big time so do yourself a favour and think twice about what you read. If there is a takeover, as is, it would be a hostile one. Shareholders, retail in particular, we get burned. Does anyone know who holds the debs from 2023? What company is involved? Think twice before you put your money in this one. Definitely better plays for acquistion trading than HEXO. For HEXO to get anything of value imo they need to resolve 2023 first. By the looks of it that will require another 240ish million shares or so..... What value does this company have with 600 million shares outstanding?
Shorts need buyers. Creating hype surronding an existing acquistion could be a good way to garner interest from the uninformed. Any acquisition would be pennies on the dollar..... If anything happens it would likely be the QC government stepping in to keep HEXO as a Quebec based company. Which would solve 2023 in a favourable way for shareholders.... Outside of that only way to get some form of value via acquisition woud be to resolve the debs via an A lender (not likely as it would have happened) or dilution (most likely). 600 million shares outstanding? $1.50-$2 maybe.... WTF knows but what value(s) the spring transaction(s) took place at means very little/
Prior to this Q I was throwing a dart on HEXO being the first large LP to register FCF howerver that clearly is now further off. Operational cash flow is nice but..... Their 5 points regarding their path forward are areas that they should have either mostly executed on by now or at the least had the balls lined up. They dont! For example, restructuring of the org chart - that should have been done already. HEXO should know their org chart and been ready to streamline roles and people once the closing was official. To start assessing that now? Or merely implying that this is something that they are going to do is weak. This is to be expected. How else do you maximize synergy savings? To point it out as something you are doing implies incompetence imo.
Tax loss season is heating up - this company is primed for a further drop - will those who drop HEXO for a loss buy back in or will they move to a different company? HEXO has basically implied they are hitting the reset and lack a plan. They basically said they are going to do what Aurora has been actively doing. ACB has been at it for the better part of a year. So HEXO is a year behind... Not good. Why have they not started to package other flower in Redee format and why is Redecan not in Quebec yet? How do they become more disciplined with product pricing to increase margings when the OCS is dropping HEXO (Tsunami only 1 flower for eons under HEXO brand) and Redecan pricing? What will an increase of .20-.30 a gram on Original Stash and Bake Sale bring? What a million a quarter revenue gain, 2 million? Yipee! Redecan and HEXO pricing decreased on OCS recently for a reason. That is concerning. They need to get more products in Redee format. This should have been in the process since the 1st of September.
BTW if Biden wanted legalization it would be a part of the build back better plan no? That is about jobs and the economy, no? Funny how cannabis is not a part of it.. Maybe Biden does not want to go down as the US president who legalized cannabis...
I do have a question for this board, what products does HEXO have that they will be able to increase their margins on and how?