The failing cannabis industry has affected many marijuana stocks adversely, HEXO Corp (HEXO Stock Report) being one of them. This pot stock has slumped by around 75% as compared to the high value in May 2019. The company announced not so impressive quarter results, further cementing the fact that pot stocks remain a commodity with an active and tough competition not only from peers but the black market as well.
The management of HEXO has come forward with a plan. To Start improving the operational efficiency so as to produce economically as well as to take on more customers away from the illegal market. The company wants to make customers aware of the benefits of marijuana provided by them (well-tested legal weed) as against the ones obtained from the black market. But, ultimately, the product’s quality and its pricing would be the deciding factor for the customers.
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With the company’s decision to cut down the prices of their product, the short-term profitability of the company would take a major blow. Anyway, with products’ current high prices, the company is facing a loss of $56.7 million as per the latest quarter figures (a $10.5 million increase year over year).
What’s Next For This Pot Stock
Moreover, this pot stock has also cut down the revenue forecasts for its fourth quarter. HEXO also let go of 200 of its employees including some in an executive position as well – thus, cutting down its expenses. Seeing the trends in the already failing industry, there is very little to no hope for profitability with HEXO’s situation.
Fighting off the black market is no easy task, and especially for companies like HEXO. The company would have to take more blows and burns as compared to some of its peers in the year ahead before reaching to deliver a sustained increased profit. Many investors have done away with the company’s stock and even the cannabis industry. The HEXO stock could be a good investment choice- but only in a longer time period.