Tilray comeback? – Cannabis | weed | marijuana

Is Tilray Making a Stock Market Comeback?

The past year has been brutal for cannabis stocks. Whether it’s because of failed banking reform in the United States or the incompetent anti-business ideology of Canada’s communist puppet Chinese government, the cannabis industry is in trouble.

But is Tilray the outlier? Is this (formerly Canadian, now New York-based) pharmaceutical cannabis company worth the investment?

Is Tilray making a comeback?

Tilray comeback

Compared to last year, Tilray’s revenue is up 20%. Gross profit margin increased by 37%. Cash and cash equivalents total $448.5 million based on Tilray’s fourth-quarter earnings.

With a market cap of $1.28 billion, Tilray easily outperforms its peers. Compare Tilray’s comeback to Aurora Cannabis ($180 million market cap) or Canopy ($288 million).

Of course, Tilray saw record-low stock prices in 2022. It’s no secret that the Federal Reserve’s tightening of monetary policy has affected the long-term prospects of many companies.

Analysts expect Tilray’s position to improve on the assumption that interest rates will stop rising. Inflation has “slowed down” and business is back to normal.

However, Tilray’s comeback hasn’t been attributed solely to cannabis sales. Tilray is also involved in alcohol, “wellness,” and distribution — the distribution portion of their operations accounts for nearly half of their revenue.

Of course, cannabis is part of Tilray’s potential comeback. They just launched a new line of THC-containing beverages and acquired HEXO. This acquisition increases their Canadian cannabis market share by 13%.

However, analysts aren’t convinced the HEXO purchase was a good decision. The Quebec-based company reported a 50% year-over-year drop in revenue in its most recent quarter. That’s a net loss of $86.5 million.

Still, Tilray expects growth of between 11% and 27%. The company also anticipates positive free cash flow next year versus an outflow of $12.9 million in fiscal 2023.

Corporate cannabis skeptics

The problem with Tilray’s comeback is the numbers. Earnings before interest, taxes, depreciation and amortization (EBITDA) isn’t an entirely accurate measure of earnings. Tilray has yet to turn a net profit. They reported a net loss of $119 million in the fourth quarter.

The CEO admits betting on American legalization is no longer an option. The company has a solid base in the European markets, especially with distribution in Germany.

However, the company also never releases quarterly results, which is a red flag for investors. Critics will say that no growth, no profits, and no margin stability make a good cannabis company.

Their new THC-infused foam drinks (under the RIFF brand) are isolated products, meaning consumers won’t experience the entourage effect of other beneficial cannabinoids.

Tilray is also active in the legal Canadian market, where legacy underground growers and retailers still make up 40% of the cannabis market.

A large proportion of Canadians are unhappy with overpriced, irradiated corporate weed. Many prefer the mom and pop pawns they’ve been using for years.

Corporate balance sheets won’t wipe out thousands of years of herbal medicine. The Tilray comeback is likely investor fiction.

Like the belief that inflation is a natural aspect of free markets and that central banks can “cool” them off by raising interest rates.

Or the belief that a company with a stock price down 47% year over year, a loss of $119 million, and a company that doesn’t expect to be profitable by 2026 is making a comeback.