I’ve gone on the record saying that quarterly reports are likely going to have the largest influence on marijuana stocks in 2019. Without legalization on the horizon in any major market, we instead have to look at the hard numbers coming out post-Canadian legalization to gauge how strong the marijuana market will be.
Tilray Inc (NASDAQ:TLRY) is the latest major marijuana stock to release its report and it was in heavy need of a boost. But it appears that Tilray stock investors are going to have to wait a bit longer before they get the salve they’ve been waiting for.
Tilray Inc has underperformed in 2019 relative to its competitors. Whereas other pot stocks have seen huge increases in the year so far, TLRY stock has instead been lagging behind.
The stock chart below shows Tilray stock’s year-to-date performance (black line) compared to Canopy Growth Corp (NYSE:CGC) in blue and Cronos Group Inc (NASDAQ:CRON) in red.
Chart courtesy of StockCharts.com
The numbers in the latest quarterly report weren’t enough to turn things around.
Revenue for fiscal 2018 increased to $43.1 million, up 110% compared to last year. That’s a huge increase, mainly motivated by the legalized Canadian market. The company also doubled the amount of kilograms sold. (Source: “Tilray, Inc. Reports Full Year 2018 Financial Results,” Tilray Inc, March 18, 2019.)
Net loss for the year, however, was $67.7 million ($0.82 per share) compared to $7.8 million ($0.10 per share) for 2017. That’s a similarly massive increase, and one that has offset the goodwill from the high revenue numbers.
The loss was caused by increased operating costs, expansion, and funding its initial public offering (IPO) on the Nasdaq, the first of its kind for marijuana stocks. Whatever the reasons, however, investors were none too pleased to see such a high net loss.
CEO and President Brendan Kennedy said in a statement:
2018 was a very successful year for Tilray with many corporate milestones. Our team made significant progress on our long-term initiatives including increasing production capacity, expanding and strengthening strategic partnerships, and acquiring complementary businesses to accelerate our future growth and leadership position in medical and adult-use cannabis.
While those are all the right words, the facts point to a different story.
Tilray stock is falling behind its competitors in terms of both gains and numbers.
Worse yet, the company was not able to use this quarterly report to turn things around for Tilray stock, which fell following the numbers being released.
The stock chart below shows TLRY stock’s recent performance (black line) compared to CGC stock (blue line) and CRON stock (red line).
Chart courtesy of StockCharts.com
While I’m no TLRY stock optimist, I had at least expected the numbers to be strong enough to generate a little bit of value this week. It appears now that I was mistaken.
As such, I have to fall back on my usual Tilray stock prediction: investors may want to look elsewhere for pot stocks.
Tilray stock is still suffering from its jaw-dropping surge when it first hit public markets. Since then, it hasn’t locked up a major partnership or supply agreement to justify its gains. Furthermore, the company was not able to reduce its net loss to a palatable amount for investors, leaving the company with another missed opportunity to see gains.
The overall effect is that TLRY stock is a lesser marijuana stock in my estimation and will need to turn things around in a big way if I am to put my confidence back in the company.
While TLRY stock has had its moments in the sun, overall, the company has always been a risk.
With so many gains coming early, the company has done little to show that it can encourage sustained share growth through partnerships or investments. With the company registering altogether mediocre numbers in its latest quarterly report, I think that investors may be wise to hold off before jumping in on TLRY stock.