What happened
Shares of Canadian cannabis supplier HEXO (HEXO) were down about 4.5% today, but that was after the stock traded 19% higher to start the day.
So what
Why the huge reversal? The company put out a news release on its high-THC UP Cannabis brand this morning, and investors may have thought it was more news than marketing at first.
A subsequent Reuters article today also may have dented investors' growth expectations for HEXO and other Canadian pot stocks.
Image source: Getty Images.
HEXO said this morning that it is repositioning its high-end UP Cannabis brand in an attempt to differentiate the name from its competitors. The brand will now promise 20% THC or higher (verified on the packaging) for consumers who "want consistently superb quality and high THC at a competitive price," CEO Sebastien St-Louis said.
Now what
Investors who saw the announcement may have initially driven shares up on the marketing push, but growth in HEXO is going to depend on more than marketing. The company is also trying to grow its marijuana business in Europe, but Reuters cited an industry report today that said Canadian pot growers may be scaling back in Europe.
In a July 2020 presentation to investors, HEXO said, "Our goal is to become a top global cannabis company." Reuters today reported that an industry research firm is predicting that Canadian producers will give way to more European players in that market.
Today's volatile ride in the share price is something that investors in the industry should be used to, and something that is likely going to continue in the long path toward increasing legalization.
