SAN DIEGO & GATINEAU, Quebec--(BUSINESS WIRE)--Shareholder rights law firm Robbins LLP reminds investors that purchasers of HEXO Corp. (NYSE: HEXO) filed a class action complaint for alleged violations of the Securities Exchange Act of 1934 between January 25, 2019 and November 15, 2019. HEXO produces, markets, and sells cannabis in Canada.
If you suffered a loss as a result of HEXO's misconduct, click here.
HEXO Corp. (HEXO) Accused of Artificially Inflating Revenue Through Channel-Stuffing
According to the complaint, in March 2019, HEXO announced its definitive agreement to acquire Newstrike Brands Ltd., touting that the acquisition would lead it to become one of the largest cannabis companies in the world, and committed itself to achieve over $400 million in net revenue in FY 2020. Throughout the relevant period, HEXO continued to positively represent the Company's financials, consistently reporting net revenues and inventory values in the tens of millions. However, HEXO failed to disclose that its reported revenues had been inflated through the use of channel-stuffing to meet its FY 2020 revenue guidance and that its reported inventory was misstated due to failure to write-off obsolete product. The truth of its financial situation was revealed on October 10, 2019, when HEXO provided preliminary Q4 revenue results that were nearly 50% lower than its previous guidance and withdrew its previously announced FY 2020 guidance. Then, on October 29, 2019, HEXO further disappointed investors with wider than expected losses in Q4 2019, which included an impairment loss of nearly CA$17 million. Following all of its disclosures, HEXO's stock plummeted almost 58% and has yet to recover.
If you purchased HEXO Corp. (HEXO) securities between January 25, 2019 and November 15, 2019, you have until January 27, 2020, to ask the court to be appointed lead plaintiff for the class.
Robbins LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. Click here to receive free alerts from Stock Watch when companies engage in wrongdoing.
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