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Hexo’s stock plunges after revenue warning, 2020 outlook withdrawn

Shares of Hexo Corp. plunged 13% toward a 10-month low in premarket trading Thursday, after the Canada-based cannabis company warned of a fiscal fourth-quarter revenue shortfall, citing “lower than expected product sell through.” The company said it was also withdrawing its fiscal 2020 financial outlook, as “regulatory uncertainty” and jurisdictional decisions to limit the availability and types of cannabis derivative products have led to an “increased level of unpredictability.” The company expects revenue for the quarter to July 31 of C$14.5 million to C$16.5 million ($10.9 million to $12.4 million), below the FactSet consensus of C$24.8 million. “Slower than expected store rollouts, a delay in government approval for cannabis derivative products and early signs of pricing pressure are being felt nationally,” the company said in a statement. “The delay in retail store openings in our major markets has meant that the access to a majority of the target customers has been limited.” The company plans to reveal fourth-quarter results on Oct. 24. The stock has tumbled 27.8% over the past three months through Wednesday, while the ETFMG Alternative Harvest ETF has shed 35.8% and the S&P 500 has lost 2.5%.

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