It can’t make you that assured when Nasdaq are publishing items like this…
These hashish inventory CEOs might lose their jobs subsequent
If we’ve realized something concerning the marijuana house over the previous yr, it’s that the time for guarantees is over. It’s put up or shut up time for these companies, and important underperformance will merely not be tolerated by buyers for any important size of time. With that being stated, the next three pot inventory CEOs could also be subsequent on the chopping block.
HEXO CEO: Sebastien St-Louis
In my view, the likeliest CEO to get the boot is Sebastien St-Louis, who leads Quebec-based HEXO (NYSE: HEXO).
By the second quarter of 2019, HEXO appeared to be on monitor as a significant Canadian participant. The firm’s flagship Gatineau facility was coming alongside on schedule, and HEXO had boosted its manufacturing capability by way of the Newstrike Brands acquisition. Further, the corporate had struck the biggest wholesale settlement with a single province in 2018 — a 200,000 kilo-in-aggregate deal over five years with Quebec.
Yet, one yr later, HEXO has made plans to close and sell the Niagara facility acquired from Newstrike, and has written down the overwhelming majority of that deal. St-Louis has additionally overseen layoffs to preserve capital, and has idled a few of the firm’s cultivation house at Gatineau.
But what may be most damning of all is commentary from St-Louis throughout a convention name with analysts final yr that steered HEXO would wish to earn 20% market share in Canada to turn out to be worthwhile. That’s an insane job provided that HEXO is promoting its inventory to boost capital and halting a few of its manufacturing to cut back prices.
Unfortunately titled podcast / video he offered Oct 28, 2019 !
Cronos Group CEO: Michael Gorenstein
Another marijuana inventory CEO that ought to think about himself on the recent seat is Cronos Group‘s (NASDAQ: CRON) Michael Gorenstein.
On the surface, Gorenstein deserves a lot of credit for helping to nab Cronos an equity investor. For those who may recall, Altria Group became a 45% equity holder in Cronos in March 2019. In return, Cronos received $1.8 billion, which was perfect given that the company only had a little more than $20 million in cash on hand prior to the deal closing. The expectation was that Cronos would use this cash to enter new markets and expand its line of high-margin derivatives. Unfortunately, investors have been sorely disappointed since March 2019.
Though Cronos did acquire Redwood Holdings for $300 million to add the Lord Jones brand of cannabidiol (CBD) beauty products to its portfolio, the buzz surrounding CBD products in the U.S. has died down in a big way. With the U.S. Food and Drug Administration putting its foot down on CBD as an additive to food and beverages, CBD sales haven’t been turning heads.
What’s extra, Cronos Group’s mediocre manufacturing from Peace Naturals resulted in solely just a little greater than $eight million in first quarter gross sales. Over the previous 5 quarters, Cronos has lost almost $155 million, mixed, on an adjusted working foundation. It’s merely not making significant progress on the working entrance, which may spell doom for Gorenstein’s job safety.
Tilray CEO: Brendan Kennedy
Finally, Tilray (NASDAQ: TLRY) CEO Brendan Kennedy ought to think about himself on a brief leash with the funding group. It’s value noting, although, that Kennedy can also be the Executive Chairman of Privateer Holdings, which Tilray acquired final yr. Privateer is Tilray’s largest shareholder, which may make eradicating Kennedy a bit tough.
Kennedy appeared to be steering Tilray towards greatness in 2018. The firm had its preliminary public providing in July 2018 and rapidly skyrocketed from its listing value of $17 to as much as $300 on an intraday basis in September 2018. Entering 2019 with greater than $500 million in money and a widely known medical hashish model, Tilray was anticipated to have little situation delivering for buyers.
Then, in March 2019, Kennedy introduced plans to de-emphasize investments in Canada in favor of the United States and Europe. Though these are bigger markets than Canada, by way of peak weed gross sales potential, it was a very odd determination to make simply over 5 months after leisure pot gross sales started in Canada. The capital outlays tied to this worldwide push have significantly drained Tilray’s cash on hand, and lately coerced the corporate to promote its widespread inventory at a lower than advantageous value to boost cash.
Without a clearly outlined working plan, and the corporate additionally getting blindsided by weak U.S. CBD gross sales, Kennedy appears to be like to be the scapegoat for Tilray’s underperformance.
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