Is a takeover of Tilray the only way for Hexo Corp. to avoid a disastrous split? – Technical420
Although Sundial Growers (Nasdaq: SNDL) had to complete a stock split to remain listed on the Nasdaq, HEXO Corp. (Nasdaq: HEXO) (TSX: HEXO) has been granted a 180-day extension to comply with the exchange’s minimum bid price requirement. continue to be listed on the Nasdaq Capital Market.
Right off the bat, it might seem like HEXO is getting special treatment from the Nasdaq, but looks can be deceiving. Over the past year, HEXO’s management team has done what it takes to stay listed on the Nasdaq. From completing a reverse spin-off to forming a strategic partnership with Tilray Brands Inc. (Nasdaq: TLRY) (TSX: TLRY), we believe the management team has given the company the ability to a return.
While we believe it will be nearly impossible for HEXO to regain the momentum it once had, the Nasdaq expansion offers the Canadian licensed producer (LP) enough runway to give the management team a fighting chance. to come back.
According to Nasdaq, the decision to extend the minimum offering price requirement for HEXO was based on the company’s compliance with the requirement to maintain listing based on the market value of shares held by the public. The exchange declared that HEXO satisfies all other applicable requirements for the initial listing except for the offering price requirement.
HEXO has told the exchange that it will (again) complete a reverse stock split if that is what is necessary to satisfy the offer price requirement. We are not surprised by this possibility and believe it is only a matter of time before a reverse split is announced. HEXO’s management team views the Nasdaq listing as a central pillar of its growth strategy and we will be watching how the story develops in the second half of the year.
Over the past year, HEXO has come under considerable pressure and momentum has mostly moved towards oversold levels. We continue to be cautiously optimistic with the Canadian cannabis sector and prefer other operators to HEXO.
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