Cannabis stocks rally on Tilray’s Q2 results, stock up 25%

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Tilray

Investors were treated to a slew of earnings results on Wednesday, most of which had to do with big tech stocks. However, while most of these big tech companies didn’t see much movement in terms of their stock prices, there was another sector that saw a surge in trading activity. Cannabis stocks were all on the move following impressive quarterly results from one of the industry’s leading giants, Tilray (NASDAQ: TLRY).

Tilray reported its quarterly results on Wednesday, which managed to impress most investors. Revenue rose 27% compared to last year to $142.2 million. Adjusted EBITDA increased almost 285% from last year to $12.3 million. That’s more than double the $5.8 million EBITDA that Wall Street was expecting. Overall, it was a better-than-expected quarter for the marijuana company, and the news had ripple effects throughout the rest of the sector.

In a very short period of time since our business combination was finalized, we transformed and strengthened Tilray, delivered solid results amid continued COVID-19 lockdowns and restrictions and achieved $35 million in synergies to date – well on our way to delivering $80 million in cost savings over the next 16 months,” said Tilray CEO Irwin Simon.

Eyes have been on Tilray ever since it announced its earlier merger with another Canadian cannabis giant, Aphria (NYSE: APHA). Forming one of the biggest pot companies globally, the merger was supposed to help the two companies cut costs by selling off synergies while also helping grow revenues faster. Expectations were already high for Tilray post-merger, but it seems that the results lived up to shareholders’ lofty targets.

Shares of Tilray surged more than 25.8% on Wednesday following the news, making it one of the best-performing stocks of the day. However, it wasn’t just Tilray that shot up. Virtually every other cannabis company on the market reported massive gains as well by association. Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), Sundial Growers (NASDAQ: SNDL), and many others were all up anywhere from 5% to as high as 12% over the day.

It’s good news for the cannabis industry, especially for Canadian-based companies. While news surrounding a U.S. potential legalization has helped prop up U.S. multi-state operators, the prospect had the opposite effect on Canadian cannabis companies. A U.S. regulation would see a massive outflow of capital out of the Canadian financial markets and into the states.

Additionally, many multi-state operators would finally be allowed to go public on big exchanges, becoming new competitors to some of the more already established cannabis companies in the world. However, it seems that a U.S. legalization might not be so soon on the horizon, after all, given some of the pushback a potential bill has received by Senate Republicans.

 

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 A.B. InBev to develop cannabis-infused drinks. – Warrior Trading News

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