This is a major week for cannabis investors as some of the biggest names in the industry are reporting their quarterly results. Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) are both reporting their results on Thursday, and investors will be paying especially close attention to these two companies considering both have posted disappointing results in the previous quarter.
On Tuesday, however, two more cannabis giants posted their results, Tilray (NASDAQ: TLRY) and Cronos Group (NASDAQ: CRON), to mixed reception from investors.
Both companies were at one point considered among the most overvalued stocks in the cannabis sector. While Tilray has since had a major correction, Cronos continues to trade at extremely hefty valuations as many expect the stock to fall sometime in the future.
For Tilray, the company managed to sell five times as much pot as last year, but still reported a net loss of $35.7 million over the quarter, which is almost double the $18.7 million from last year. Despite still losing money, revenues have shot up dramatically, with Tilray reporting $51.1 million in revenue compared to the $10.1 million back in 2018. International demand in countries like Germany is also expected to play a major role in the future for Tilray.
“[International revenue] will definitely increase,” said Tilray’s CEO Brendan Kennedy in an interview. “And in Germany, we see continued demand, we see demand for high-quality GMP [good manufacturing practices] flower. We’ve proven we can get product into Germany, it’s more difficult than people understand to get products there and it’s difficult to have sellthrough there.”
As for Cronos Group, it managed to sell just over 3,000 kilograms of cannabis, resulting in $12.7 million in revenue for the quarter. While the company did report a $788 million profit, this was entirely due to a one-time $835 million gain on an accounting revaluation rather than actual sales, so investors should discount this sudden surge in income. The biggest problem for Cronos is that it has been struggling to sell pot at a decent price. Its average price per gram came in at $3.75, which is a 48% decline from the previous quarter.
Both stocks ended up slipping a little in response to the news. Shares of Tilray dropped by 3.8% overall including after-hours trading, while Cronos fell by 2.7%. The situation isn’t particularly good for large-cap cannabis stocks, as the prospects for Canopy Growth and Aurora don’t seem that much better either once they release their results later this week. The only Canadian large-cap pot stock that has been doing well is Aphria (NYSE: APHA), which has managed to report profits for two consecutive quarters.
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. through a partnership with Authentic Brands Group 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
