Tilray Stock Forecast: What the Q3 Earnings 2018 Mean for the Future of the Company

Tilray Stock Forecast: What the Q3 Earnings 2018 Mean for the Future of the Company
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Tilray Stock Forecast

Last week was an interesting one in the marijuana industry. Many companies released their quarterly reports, with numbers both good and bad trickling in. But much to my surprise, one of the best performers was Tilray Inc (NASDAQ:TLRY). Despite what I believed to be primarily hype surrounding the company, it was able to deliver solid numbers. So what does that mean for the Tilray stock forecast?

First, let’s parse through the numbers.

Revenue jumped by 85.8% to $10.0 million in the third quarter and by 78.9% year-to-date. The company attributed this revenue jump to higher patient demand, bulk sales to other licensed producers, and accelerated wholesale distribution in export markets.

The company also witnessed a massive increase in total kilogram equivalents sold to 1,613 from 684.

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Average net selling price per gram fell to $6.21 versus $7.53 for the three months ended September 30, 2017. The reduction in 2018 compared to 2017 was primarily due to an increase in bulk sales as a percentage of total revenue.

While TLRY stock still showed a net loss for the quarter of about $18.7 million, this is all par for the course for a young company looking to grow. (Source: “Tilray, Inc. Reports Third Quarter 2018 Earnings,” Tilray Inc, November 13, 2018.)

Beyond the numbers, the company also demonstrated some very strong fundamentals that give me hope for the Tilray stock forecast.

Tilray currently operates in 12 countries on five continents, signaling a strong global presence. On top of that, the company has signed agreements to supply cannabis to eight provinces and territories within Canada.

The overall picture is that there is more to Tilray than just hype.

“We are in the early stages of achieving our growth potential and our team continues to strategically execute on disciplined operational initiatives and investments to support Tilray’s long-term, sustainable growth as the pace of legalization continues to accelerate around the world,” said Brendan Kennedy, CEO of Tilray, in a statement. (Source: Ibid.)

This leads me to believe that the Tilray stock forecast has a real chance to grow moving forward.

The problem, as always with TLRY stock, is the company’s ceiling. It grew way too fast in its early days since it had its initial public offering (IPO) on the Nasdaq. Being the first company to do so had Tilray stock up by as much as 1,000% in the following weeks and months.

The downturn in the marijuana industry has dampened those gains, but it still rests at over a 500% gain since it IPO’ed a little over four months ago.

Chart courtesy of StockCharts.com

The question is whether there’s room for the company to grow, even with all these strong numbers and developments going for it.

I’m of two minds on this.

The company’s presence on the Nasdaq has, for the most part, played out well in its favor. It shares the listing only with Cronos Group Inc (NASDAQ:CRON), and American investors seem to prefer TLRY stock to CRON stock.

The access to capital afforded to it by its Nasdaq listing will go a long way toward growing the company.

On the other side, it’s hard to see how Tilray could grow that much more in the next few months and years. While there’s room for gains, certainly, the extent of those gains compared to other, lesser-valued companies is what gives me pause.

Analyst Take

The Tilray stock forecast shows that gains are ahead. The only question is how large those gains will be relative to its competitors.

I believe now that Tilray stock will grow, but I believe that these gains will ultimately be smaller than some of its competitors.

As such, I’m now thinking that TLRY stock is going to behave radically different than it has in the past. That is to say that I see it developing into a stable if less exciting stock as time goes compared to its history as the most volatile marijuana stock around.