Aurora Cannabis (TSX:ACB) and HEXO (TSX:HEXO) Will Love This NYSE Rules Waiver

Here’s why the New York Stock Exchange’s latest move could relieve listing concerns over Aurora Cannabis stock and HEXO shares.

| More on:

News on Monday was that the New York Stock Exchange, one of the largest exchanges in the world, is in talks with the U.S. Securities and Exchange Commission (SEC) in an effort to temporarily ease continued listing requirements for companies whose equities are traded on its platform.

Marijuana producers Aurora Cannabis (TSX:ACB)(NYSE:ACB) and HEXO (TSX:HEXO)(NYSE:HEXO) are some of the many NYSE-listed stocks that could significantly benefit from the said move if an OK signal is granted by the securities regulator.

Why Aurora Cannabis stock and HEXO stock?

For a company’s shares to continue trading on the New York Stock Exchange, the stock price should hold at or above US$1 per share, and the company’s global market capitalization should hold at or above US$50 million for 30 consecutive days.

Aurora Cannabis shares traded around US$0.80 on the NYSE at the time of writing, and HEXO stock exchanged hands at quotes around US$0.69.

Therefore, the two companies are already in breach of one of the exchange’s continued listing rules. It would be natural to expect them to be served with notices at any time in the future.

The NYSE’s welcome proposal

Companies worldwide are experiencing severe business disruptions. Some firms suspended all or part of their operations in compliance with social-distancing guidelines. Some saw business completely dry up, as the world grapples with the COVID-19 pandemic.

Share prices have plummeted in a market crash since late February, as the pandemic dampened investor enthusiasm.

Given the downward pressure on listed stocks, it’s the NYSE’s noble proposal that companies need to be given a reprieve. A waiver on minimum continued listing rules will be a good thing. It will allow management teams to avoid worrying about potential delistings from a top capital-raising platform.

Further, companies and the exchange will avoid the time consuming and expensive delisting processes.

Most noteworthy, some of the affected companies are mere victims of a general negative investor flight from equities markets; there weren’t any negative company-specific events that warranted their “punishment.”

That said, could we confidently say that Aurora and HEXO don’t have company-specific issues dragging their stock prices right now?

Perhaps not.

The cannabis industry has suffered from low to negative investor sentiment for months. Canadian pot firms started writing down inventories late last year while blaming government policy for the slower-than-expected market growth in Canada.

However, ACB and HEXO are facing well-documented liquidity challenges that dent their survival prospects during this capital dry spell, as investors take a flight to safety during the coronavirus pandemic.

The two troubled firms would welcome a relaxation of continued listing requirements on the major exchange as there was in 2009. Management will have one less critical matter to worry about for a few months.

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 Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. and HEXO.

More on Coronavirus

A airplane sits on a runway.
Coronavirus

3 Fresh Stocks I’m Likely Buying in 2025

I am likely buying Air Canada (TSX:AC) stock in 2025.

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Coronavirus

Canadian RRSP Stocks to Buy Now for Retirement

Alimentation Couche-Tard Inc (TSX:ATD) is a quality retirement stock.

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Coronavirus

Retirees: What Rising Inflation Means for Your CPP Payments

If you aren't getting enough CPP, you can consider investing in stocks and ETFs. Canadian National Railway (TSX:CNR) is one…

Read more »

Coronavirus

Air Canada Stock Is Starting to Get Ridiculously Oversold

Air Canada (TSX:AC) has been beaten down to absurd lows.

Read more »

Coronavirus

Should You Buy Air Canada Stock While it’s Below $18?

Air Canada (TSX:AC) stock is below $18. Should you invest?

Read more »

Illustration of data, cloud computing and microchips
Stocks for Beginners

3 Canadian Stocks That Could Still Double in 2024

These three Canadians stocks have been huge winners already in 2024, but still have room to double again in the…

Read more »

Aircraft Mechanic checking jet engine of the airplane
Coronavirus

Can Air Canada Stock Recover in 2024?

Air Canada (TSX:AC) stock remains close to its COVID-19 era lows, even though its business has recovered.

Read more »

A airplane sits on a runway.
Coronavirus

3 Things to Know About Air Canada Stock Before You Buy

Air Canada stock continues to hover below $20 despite the sharp rise in travel demand seen across the industry. What's…

Read more »