Hexo, one of the principal suppliers to the Sociéte Québécoise du Cannabis, abandoned its guidance on fiscal 2020 and warned investors its Q4 revenue—which it originally projected to be twice Q3’s $13M—would likely only reach between $14.5M and $16.5M.
- CEO Sébastien St. Louis said revenue fell short of guidance due to a lagging ratio of products distributed to products sold (“sell-through”). St. Louis said the company was changing its sales and operations strategy to meet those needs. He also noted Hexo sales suffered as a result of the lower-than-expected number of REC stores and delayed legalization of 2.0 products.
Le Devoir—In French
- It continued a difficult week for Hexo, who announced the sudden departure of chief financial officer Michael Monahan after only four months. Monahan cited family reasons for his exit, after which Bank of America Merrill Lynch downgraded the stock by two levels, from “buy” to “underperform.”
- Pot stocks short-seller Betting Bruiser’s Harvest Moon Research published a report claiming Hexo posted surprising and unrealistic yields. The report noted Hexo have increased capacity at their Gatineau production facility by 15% but reported increased production yields by 100%.
Harvest Moon, Twitter—Betting Bruiser
- Hexo’s declining fortunes led the news Thursday on a day when 21 pot stocks dropped by 10% or more. Investor WeedStreet420 called Thursday the worst day of the year so far.