What happened

Canadian cannabis purveyor HEXO (NASDAQ:HEXO) has been a dud over the last few days, with its shares falling by 12% week to date as of Thursday's market close. Marijuana stocks are generally volatile, and HEXO's latest earnings report wasn't its greatest.

So what

HEXO published its third-quarter results on Monday. It booked 22.7 million Canadian dollars ($18.4 million) in total revenue. This was only 2% higher on a year-over-year basis; worse, it was 31% lower quarter over quarter.

Net loss totaled CA$20.7 million ($16.8 million), slightly narrower than the second-quarter result, and only a bit steeper than Q3 2020's CA$19.5 million ($15.8 million).

Smoke emanating from a cannabis flower.

Image source: Getty Images.

On average, analysts following HEXO stock were forecasting a CA$0.06 ($0.05) per share net loss; the actual shortfall was CA$0.17 ($0.14). They were also estimating CA$34.4 million ($27.9 million) in revenue.

Marijuana stock investors generally tolerate the frequent bottom-line losses from their companies, as long as these businesses post at least some encouraging revenue growth.

Now what

HEXO said its weak/negative top-line growth derived from production decisions it made in Quebec; outside of the province, revenue from recreational marijuana rose by 169% year over year.

That didn't comfort investors, not least because HEXO is headquartered in Quebec. The thinking is, it probably should have done better there, no matter that market's challenges.

Also, the company is aiming to get to the top of the Canadian marijuana pile through a series of acquisitions; doing poorly with its core business at present doesn't bode well for a bulked-up future.

 
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.