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HEXO’s Results Weighed Down Cannabis Sector Last Week

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Dec. 4 2020, Updated 10:52 a.m. ET

Weakness in the sector

Weakness in the cannabis sector continued last week, especially after HEXO (HEXO) reported its earnings on June 12. HEXO’s earnings largely disappointed the market, and the stock plunged almost 16% in the following days. HEXO’s YTD returns stood at 59% as of June 14 despite the sell-off after its earnings. Let’s look at how its peers performed last week.

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Negative momentum

As the above chart shows, most of HEXO’s peers ended last week in the negative territory. Green Thumb Industry (GTBIF), for example, lost 12.6% compared to HEXO’s 11.6% between June 7 and June 14. Emerald Health (EMH) and OrganiGram (OGI) were not far behind with a decline of 11.5% each over the same period last week.

Last week’s disappointing performance from the cannabis sector also weighed down the Horizons Marijuana Life Sciences ETF (HMMJ) and the ETFMJ Alternative Harvest ETF (MJ), which ended the week lower by 2.8% each. Unfortunately, for the most part, recent earnings releases have failed to live up to the expectations for stocks within the sector. The weak earnings also cast doubt on the strong potential of the cannabis sector that analysts had anticipated last year after cannabis was legalized for recreational purposes in Canada.

Nonetheless, there were some positives for investors. Innovative Industrial Properties (IIPR) and Tilray (TLRY) gained 14% and 0.54% last week, respectively.

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