The date was May 25, 2018. That’s when Canopy Growth Corp (CGC, WEED), the largest cannabis company in the world, graduated from US OTC markets and began trading on the New York Stock Exchange (NYSE).
It was a major win for Canopy – here’s why.
That big injection of credibility set the stage for Constellation Brands (STZ) to ramp its investment in Canopy from $200 million to $4 billion less than 12 weeks later, sending shares soaring into a new all-time high. Take a look at the big jump below.
Without the NYSE listing – that big Constellation investment would have never happened.
Today, I see that same exact pattern unfolding and I think it’s creating another great opportunity. Hexo Corp (TSX: HEXO, OTC: HYYWF) is one of the largest Cannabis companies in Canada and the world with a market value of $1.2 billion.
Hexo operates 1.8 million square feet of facilities in Ontario and Quebec. The company is also expanding into Europe, recently securing a medical cannabis license from the Greek government. Hexo has been a bit weak on the chart for the last few months, but now I see a potential trigger that could give shares a big jolt.
HEXO Shares Began Trading on the New York Stock Exchange on July 16
Hexo is following Canopy’s lead, joining an elite group of Canadian cannabis companies that have graduated to major US exchanges.
On July 16, shares of Hexo began trading on the New York Stock Exchange under the ticker symbol HEXO.
Here are some more details from the press release.
HEXO Corp is pleased to announce it has received approval from the New York Stock Exchange (the “NYSE”) to transfer the listing of its common shares from the NYSE American LLC (the “NYSE-A”) to the NYSE. HEXO expects to begin trading on the NYSE effective at the open of markets on July 16, 2019.
HEXO’s shares will trade on the NYSE under the ticker symbol “HEXO”, the same symbol the Company’s common shares currently trade under on the NYSE-A, as well as the Toronto Stock Exchange (the “TSX”). HEXO’s shares will continue to trade on the TSX under such symbol.
“We are extremely pleased to list on the NYSE and believe it reaffirms HEXO’s strong track-record for exceptional corporate governance and is further proof that we are a valuable cannabis industry partner for Fortune 500 companies,” said CEO and co-founder Sebastien St-Louis. “HEXO is well-positioned to support consumer packaged goods companies looking to enter the space given our success in the industry, our established infrastructure including a manufacturing centre of excellence in Ontario, Canada, our technology to support mass-scale extraction and processing of advanced cannabis products, and our regulatory expertise.”
Here’s why this is good news for Hexo.
#1 – This Uplisting Gives Hexo a Big Blast of Credibility
It’s very difficult for a company to score an uplisting to the NYSE. Hexo had to prove the value of its equity.
It was also required to undergo a rigorous financial review. Hexo passed on both fronts, demonstrating that Hexo has a solid financial profile. Once listed, NYSE companies are subjected to strict reporting standards – adding another layer of credibility.
#2 – Better Trading Volume is Good for Shares
Uplisting to the NYSE virtually assures additional trading volume as more investors have access to the NYSE than the less regulated OTC markets. Higher trading volumes are almost always good for share price appreciation.
#3 – Hexo is Joining an Elite Group of Canadian Cannabis Companies
Only a handful of Canadian companies have had the financial strength to score an uplisting to a major US exchange such as the NYSE or NASDAQ. The list includes Canopy, Aurora Cannabis, Cronos, Aphria and Canntrust.
#4 – The Uplisting Could Trigger a Massive Cannabis Buyout
Here’s where the uplisting to the NYSE gets really interesting. Back in August of 2018, Hexo announced a partnership with the Molson Coors Brewing Company (NYSE: TAP), one of the largest beer and alcohol companies in the world.
Under the partnership, Hexo and Molson are developing cannabis-infused beverages for the Canadian market that will be released in December when it becomes legal to sell cannabis beverages in Canada. The partnership also has a goal of selling CBD drinks in eight US states by 2020.
The uplisting to the NYSE got me thinking – this could set the stage for Molson to buy Hexo in a cannabis mega-deal. If it happens, I would expect shares of Hexo to soar on the good news.
Hexo Shares are up More than 200% in the Last Two Years
Hexo shares are up more than 200% since going public two years ago. Shares have been a bit weak with the broader cannabis sector for the last few months.
The Big Picture on the Hexo NYSE Uplisting
Hexo just scored a coveted uplisting to the New York Stock Exchange. I see four triggers that tell me this could be very good for shares which could potentially lead to a buyout from Molson Coors.
Keep your eye on shares, this stock should be in play for the next couple of months.
Michael Vodicka owns shares of Canopy (CGC) and Aurora Cannabis (ACB).
About the Author
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.