Searching for the Bounce in Hexo Corp (OTCMKTS:HYYDF)

Searching for the Bounce in Hexo Corp (OTCMKTS:HYYDF)

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Support will now be tested quite actively at the very important $3.75 level for Hexo Corp (OTCMKTS:HYYDF). The question now for the cannabis-infused beverages leader with a pile of Molson-Coors money is about whether or not the stock has a strong-handed accumulation bid sitting under the market putting a floor in the tape. Helping to direct the story, the company just announced its financial results for the first quarter of the 2019 fiscal year. According to the release, gross revenue for the quarter reached $6.7 million, which includes $5.2 million in sales of adult-use cannabis in the first two weeks following legalization in Canada.

“HEXO hit tremendous milestones in the weeks following the legalization of adult-use cannabis,” said HEXO’s CEO and co-founder Sebastien St-Louis. “The Company continues to honour its commitment to executing on its plans, which has led to a significant portion of our first quarter’s $6.7 million in revenue generated in just two weeks and represents more than a 500% increase over last quarter.”

Hexo Corp (OTCMKTS:HYYDF) trumpets itself as a company that, together with its subsidiaries, produces and distributes medical marijuana products. The company is headquartered in Gatineau, Canada, and, as noted above, just changed its corporate name from “The Hydropothecary Corporation” to “HEXO Corp.” effective August 29, 2018.

HEXO creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market.

The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year-end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.

According to company materials, “HEXO Corp. creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market. The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year-end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.“

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As noted above, HYYDF just announced its financial results for the first quarter of the 2019 fiscal year.

Recent action has seen -5% stripped out of shares for shareholders of the stock during the trailing week. Moreover, the stock has seen interest climb, with an increase in recent trading volume of 14% above its longer-run average levels.

“HEXO’s first quarter financials highlight the remarkable pace of its adult-use cannabis sales and puts HEXO on-track to generate significant revenue this year”, added Mr. St-Louis. “Today, we are a world-class organization as our team continues to focus on our strategy which includes partnering with Fortune 500 companies in various product categories and leverage their distribution platforms.”

At this time, carrying a capital value in the market of $739.5M, HYYDF has a significant war chest ($244.8M) of cash on the books, which must be weighed relative to about $12.1M in total current liabilities. One should also note that debt has been growing over recent quarters. HYYDF is pulling in trailing 12-month revenues of $4.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 63.7%. We will update the story again as soon as developments transpire. Sign-up for continuing coverage on shares of $HYYDF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $HYYDF, either long or short, and we have not been compensated for this article.

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