Business

Marijuana Shares: Tilray Effects Beat As Rally In Marijuana Shares Loses Steam

Canadian cannabis producer Tilray (TLRY) reported fourth-quarter results after the close Wednesday that beat expectations, as Tilray stock and other marijuana stocks gave up huge gains during the regular session.




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The company reported after announcing plans to merge with rival Aphria (APHA) and expanding in Europe. The report also follows a massive cannabis stocks rally driven by U.S. legalization hopes and, potentially, a bigger retail-investor push spurred in part by the Reddit board WallStreetBets.

Tilray Earnings

Estimates: Wall Street expected Tilray to lose 14 cents per share. Revenue was expected to increase 18% to $55.55 million.

Results: Revenue rose 20.5% to $56.6 million. The company lost two cents per share.

In November, Tilray said it was “poised to deliver positive or break-even adjusted EBITDA in the fourth quarter of 2020.” EBITDA stands for earnings before interest, taxes, depreciation and amortization.

Stock: Shares rose 9% after hours in the stock market today, after finishing 9% lower during the day. The stock jumped 19% on Tuesday.

Tilray stock has a 68 Composite Rating and a 23 EPS Rating. Shares were above their 50-day and 200-day lines, but remained volatile.

At the close of regular trading, Canopy Growth (CGC) fell 4%. Aurora Cannabis (ACB) dropped 7.3%. Aphria gave up 5%. Cronos Group (CRON) lost 5.4%.

Last Tuesday, Canopy Growth reported a big quarterly loss but forecast positive adjusted EBITDA in the second half of 2022. Later in the week, Aurora reported a steeper loss than expected, as it tries to shift its focus toward more premium weed offerings.


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Analysts Question Marijuana Stocks Rally

As Tilray tries to contain losses and debt, some marijuana stock analysts have wondered what Aphria stands to gain from the merger deal.

Tilray has tried to increase sales via its Canadian recreational business and expand its medical business in Europe. It also owns Manitoba Harvest, which sells products like hemp granola and protein powders, as well as extracts with CBD.

In recent weeks, Tilray has landed deals to supply medical cannabis in France, Portugal and the UK. It also sent its first medical cannabis products to Spain. However, it has warned that business in Europe could be shaky due to coronavirus restrictions.

Even as marijuana stocks rose this year, analysts have said the Canadian industry’s path to the full U.S. legal market, which would include CBD and THC products, is narrow.

Sweeping nationwide legalization could be years away in the U.S. Canada’s marijuana industry is still losing money. Operating in the U.S. would require cultivation and production infrastructure. U.S. operators like Curaleaf and Green Thumb Industries have already built up a sizable presence in legal states.

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