HEXO has been one of the fastest growing cannabis companies in the industry, having impressive sales growth over the past few quarters. However, the company’s Q3 2019 result has proven not to be what some expected as not only did the sales drop but even the losses kept on coming for the Canadian company. The company’s primary source of revenue is through the sales of recreational marijuana in the Canadian market but the results were disappointing following periods of impressive growth.
Revenue Numbers Disappoints
The total sales for the quarter came in at CA$15.9, which was a significant drop from the CA$16.2 million in sales that Hexo generated in the same quarter last year. The results were announced late Wednesday and soon the market cottoned on to the fact that all was not well, as the stock dive.
The sales figures for the period have now raised serious doubts about HEXO’s ability to generate CA$ 400 million in 2020. Moreover, the company’s losses widened in the quarter from the previous one and hit CA$ 7.75 million.
However, in this regard, it is important to note that the company had received its first harvest from its new greenhouse that is spread over 1 million square foot and analysts believe that the rise in production capabilities will go a long way in boosting HEXO’s sales in the near future. The company projects that it is going to produce 150,000 kilos of cannabis a year going forward.
The total amount of cannabis sold was 2904 kilos for the quarter and that in fact reflected an 8% rise from the same metric in the prior-year quarter. Additionally, the company is aiming to offer new product categories and has created a joint venture named Truss with Molson Coors’ that will be working with the production of cannabis-infused beverages. It is all set to be a popular product category soon as the Canadian authorities are looking to legalize it at some point this year.
HEXO Stock tumbled 9.15% to $5.81 on Thursday. Nevertheless, the stock is still up about 50% so far in 2019 through Thursday.