As the stock market rally continues, it was a fairly good week for cannabis stocks. We saw valuations stabilize and most of the large caps gained on the week. Many investors are concerned however if the market will be able to sustain its recent gains, or if it’s just simply a speculation driven rally.
Large-cap Canadian licensed producers got some relief as the Canadian government is now allowing curbside pick up at their retail locations. This will help companies generate revenues during these tough times.
Potential Positive News for Aurora Cannabis (ACB)
This week there was some potential positive news for ACB as the NYSE announced they are in talks with the SEC to adjust minimum exchange requirements. Many investors have been concerned about ACB as the stock has now fallen below $1 on the NYSE and there has been widespread fear that the company could be delisted.
There has also been speculation about a reverse split that some investors felt was imminent for ACB, if they want to stay on the NYSE. Reverse splits in the past have proved to be negative to both shareholder sentiment and share price. If the new regulations are approved then ACB could breathe a sigh of relief and management will have one less problem to worry about. ACB remains up on the week, just shy of $0.90, and investors are anxiously awaiting their upcoming quarterly earnings report. Earnings are scheduled for early May.
Innovative Industrial Properties (IIPR) Continues to Expand
As the market continued to rebound, real estate was one sector that saw some of the most rewarding gains this week. IIPR rallied into the close to end the week up almost $10 per share at $75. IIPR recently closed on its most recent acquisition with AWH for a facility in Massachusetts worth $49 million. Despite the tough market conditions IIPR has continued to execute on their acquisition strategy and we are excited to see their next quarterly earnings report.
HEXO Corp. (HEXO) Raises Cash, Shares Fall
HEXO announced that they would be issuing more shares in an effort to raise additional capital. The units were priced at $0.77 and consist of one common share along with a common share purchase warrant. The warrants are valid for a period of 5 years following the closing date of the transaction at an exercise price of $0.96 CAD. The underwriters of this deal have agreed to purchase 52,000,000 units from the Company.
Shares of HEXO tanked 25% following this announcement, as it’s evident that the company is having a hard time during these challenging market conditions. Liquidity, especially in the cannabis sector, has been drying up and the COVID-19 crisis could prove to be the final nail in the coffin for some companies. HEXO mentioned in their most recent quarterly earnings report that they were expanding into Ontario. The company plans to target the black market so investors are hoping that they can start to generate substantial revenues from their efforts.
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ACB shares were trading at $0.88 per share on Friday afternoon, up $0.02 (+2.83%). Year-to-date, ACB has declined -59.26%, versus a -13.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More…