Will Hexo Corp (TSX:HEXO) Stock Soar After NYSE Listing?

Hexo Corp (TSX:HEXO) is the latest Canadian pot company to eye an NYSE listing. Will it enrich investors?

| More on:

Can you believe it? Another Canadian cannabis stock is looking to list on the New York Stock Exchange. And this time, it’s Hexo Corp (TSX:HEXO).

In a recent statement, the company’s CEO Sebastien St-Louis hinted that he was pursuing an NYSE listing to increase brand awareness. Citing the need to “tell Hexo’s story,” he said that he wanted his company to become one of four world-renowned cannabis producers.

This is a big ambition. But can an NYSE listing really help him achieve it? And more important, will it enrich Hexo investors? To answer these questions, we need to understand a little more about Hexo Corp and how it plans to compete with larger brands in the cannabis industry.

An eye on beverages

Hexo Corp is one of the smaller TSX cannabis companies by market cap. In order to compete with larger companies like Aurora Cannabis Inc (TSX:ACB)(NYSE:ACB), it needs to differentiate itself. One way it has sought to do so is through cannabis-infused beverages. Such beverages have the potential to be very lucrative for individual cannabis companies because of exclusive supply deals that protect them from competition.

Many cannabis vendors have been in talks with beverage makers to discuss creating cannabis beverages, but Hexo is by far the furthest along the path, having actually created a joint venture, Truss, with Molson-Coors Brewing. 

How does this tie in with Hexo’s plans to list on the NYSE? It has to do with recognition.

Acquisition potential

Obviously, Hexo Corp is a company that wants to partner with larger businesses for mutual benefit. The Molson-Coors JV is proof enough of that. But with the results of this venture far from concrete–we don’t have a beverage yet–the company still has to keep its options open. That includes courting other large American conglomerates, a goal that an NYSE listing would certainly advance by giving Hexo more name recognition by virtue of coverage in the U.S. media.

A highly favourable outcome–for Hexo investors if not its management–would be an outright buyout by a larger U.S firm. If that happened, the larger company would likely buy Hexo’s shares for a higher price than they traded for in the markets. In that scenario, everybody already holding Hexo shares would profit–possibly handsomely.

No guarantees

Ultimately, there is no guarantee that listing on a U.S. exchange will drive Hexo shares up or lead to M&A activity. However, it’s almost certain that listing on the NYSE will increase Hexo’s brand awareness and trading volume.

This helps the company keep its options open so it can pursue partnerships on favourable terms. For a smaller company in a highly competitive industry, that may make all the difference in the world.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing.

More on Investing

how to save money
Investing

The Best TSX Stock for Canadians to Buy With $1,000 Right Now

iShares S&P/TSX 60 Index ETF (TSX:XIU) could be a great starter investment for new investors in Canada.

Read more »

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

hand stacks coins
Investing

A Top TSX Stock to Buy Now for Real Wealth Later

Intact Financial (TSX:IFC) stock is a fantastic dividend-growth play for the next 15 years and beyond.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, November 14

The U.S. wholesale inflation data and Fed chair Jerome Powell’s remarks about the economy will remain on TSX investors’ radar…

Read more »

Man data analyze
Tech Stocks

3 Reasons Celestica Stock Is a Screaming Buy Now

These three reasons make Celestica stock a screaming buy for long-term investors.

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »