What happened
Shares of Hexo (HEXO) are up 7% in morning trading Monday, rising to $0.67 per share at 11:30 a.m. ET, on no particular news for the company. However, today is a pretty big day for fellow pot stock Sundial Growers (SNDL 3.08%) as it faces imminent delisting from the Nasdaq exchange for failing to maintain a stock price above $1 per share.
Hexo got a similar notice from the exchange last week and it now has six months to regain compliance.
Image source: Getty Images.
So what
Unlike Sundial, which got caught up in the meme stock trading frenzy of a year ago, Hexo has been going about its own business. The marijuana stock maintains it is the overall market share leader in Canada with a 14.6% share, compared to No. 2 Tilray, which has a 12.5% share. It also has the top spot in a number of industry segments, including beverages, capsules, and oils.
Hexo's joint venture with Molson Coors Beverage, called Truss Beverage, also owns the top spot in cannabis-infused beverages, holding a 40% share of the market.
Yet it is still operating at a significant loss, with operating losses totaling over $155 million last quarter while posting net losses of $0.46 per share.
Now what
When Sundial Growers was given its ultimatum to increase its share price last August, it did nothing. Often, companies in similar situations will effect a reverse stock split to artificially boost their share price. It chose not to. Now, today is the deadline for its delisting.
No doubt it will just begin trading on the over-the-counter market, often called the pink sheets, if it is delisted, but it portends what could happen to Hexo if its stock price doesn't increase by 50% by the end of July.
