Major cannabis stocks have been having a lot of trouble over the past couple of months. Two of the biggest names in the industry, Aurora Cannabis and Canopy Growth, have both failed to impress investors, with the former announcing a major goodwill adjustment earlier this year which totaled around $1 billion. As it turns out, another major pot stock is on the chopping block. Tilray (NASDAQ: TLRY) saw its share fall by around 15% after the company reported its quarterly results.
Although revenue figures are up significantly from last year, growing by 287% to C$217.4 million, it wasn’t enough to push the company into the positive. Net losses remained quite high for Tilray, coming in at $219.1 million for the quarter, which was significantly worse than the $31 million loss reported back in Q4 2018. At the same time, Tilray also confirmed that it was hit by a $112 million impairment charge, which was in part by losses were so high for this quarter.
“Like our peers, we have faced industry challenges, but we remain committed to driving long-term value for our shareholders,” said CEO Brendan Kennedy in a press release. “We are still in the early days of this emerging growth industry and will continue being good stewards of shareholder capital as we aim to build the world’s most trusted and valued cannabis and hemp company.”
Investors are waiting for pot stocks to start becoming profitable, something that many companies promised would happen many months ago. Tilray also could be facing an imminent cash problem, with the company having only $96.8 million in immediate financing on its balance sheet. Considering just how high losses have been, this won’t last Tilray that long. Although the company did take on an extra $60 million in financing, it still doesn’t solve its long-term financial problems unless Tilray does something to get its losses under control.
Wall Street analysts remain fairly pessimistic in regards to the company. Although the price of the stock has fallen a good deal, making it a cheaper buy now than it was a year ago, the results Tilray has brought in have been a major disappointment in comparison to the optimistic promises management made back in 2018 and 2019.
Shares of Tilray were down 14.5% on Tuesday in response to the news. Most other cannabis stocks ended the trading session in the red as well, despite the 50-point interest rate cut announced by the Federal Reserve. Although the central bank hoped that the news would help prop up markets in these troubling times, fears about the ongoing coronavirus epidemic are continuing to weigh heavily against the minds of investors around the world.
Tilray Company Profile
Tilray, headquartered in Nanaimo, Canada, cultivates and sells medical and recreational cannabis through a portfolio of brands that include Canaca, Dubon, and Manitoba Harvest. The bulk of Tilray’s sales are in Canada, but the company also sells CBD Products in the U.S. and exports medical cannabis globally from its production facilities in Canada and Portugal. Tilray also has a partnership with AB InBev to develop cannabis-infused drinks. – Warrior Trading News
