Why is HEXO Trading Down 8% Today?

HEXO (NYSE:HEXO) is, once again, dipping into the investor well to obtain funds. The company announced Friday that it is raising gross proceeds of $20 million in a fresh issue of stock and warrants, effected through a registered direct offering.

Specifically, the company will sell…

just under 12 million shares at an offering price of $1.67 apiece. Those snapping up the new stock will also receive warrants — almost 6 million of these are to be disbursed. The warrants have an exercise price of $2.45 per share, with a five-year term.

HEXO has made a series of secondary stock offerings within the past few years. Its shares outstanding count has more than tripled since late 2017; the latest tally is slightly over 272 million shares. The company is consistently unprofitable; inĀ HEXO’s most recently reported quarter, it posted an EBITDA shortfall of 66 million Canadian dollars ($51 million).

Prior to the announcement of the latest fundraising effort, HEXO’s stock closed at $1.78 per share.

HEXO wasn’t all that specific about how it’ll utilize the proceeds of the issue, although it did write that among the uses will be “funding the Company’s research and development to further advance the Company’s innovation strategies.”

The share and warrant issue is anticipated to close “on or about” Jan. 22, HEXO said.

Investors are…

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