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Why HEXO Stock Fell Almost 18% Last Week

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Jul. 29 2019, Published 7:49 a.m. ET

HEXO (HEXO) stock lost nearly 18% in the week ending July 26. There weren’t any catalysts that showed weakness in the stock. However, HEXO stock has been trending down since July 18. The company announced that its chief brand officer, Adam Miron, will step down. Miron co-founded the company. He will still hold the board of director seat.

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Why did HEXO stock fall?

The news doesn’t indicate signs of distress. However, if we view the cannabis industry from a broader perspective, there might be some concerns among cannabis investors. For example, we can find a parallel with what happened to CannTrust. Recently, CannTrust (CTST) didn’t comply with Health Canada’s regulations. The company’s CEO and chairman of the board knew about the matter. As a result, the company terminated CEO Peter Aceto. The company also asked its chairman, Eric Paul, to resign from his position. Paul co-founded the company.

Recently, Aphria (APHA) experienced similar issues due to investments in Latin America. Aphria set up a special committee to review the allegations. As a result of the allegations, Aphria’s CEO Vic Neufeld stepped down from his position.

Canopy Growth (WEED) (CGC) announced that its co-founder and co-CEO, Bruce Linton, stepped down. However, Linton said that he was fired

Speculations

For Aphria and CannTrust, key people stepped down following negative news about the companies. In Canopy Growth’s case, there wasn’t any indication of wrongdoing. Canopy Growth is partly owned by Constellation Brands (STZ). Constellation Brands wasn’t happy with Canopy Growth’s recent quarterly results.

The departure of HEXO’s co-founder isn’t an early indication of wrongdoing. However, with so much going on in the cannabis industry as indicated above, we’re wary of key people leaving their positions. The market certainly doesn’t appear to have taken the news well. As a result, the stock felt selling pressure.

Read If Not Medical, How Will HEXO Establish International Presence? and Why Is the US CBD Market So Attractive? to learn more.

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