Quantcast

Why Tilray Stock Is Tanking Today


What happened

Shares of Tilray (NASDAQ: TLRY) are tanking today, down by 10.3% as of 10:40 a.m. EDT. The big drop reflects investors' disappointment with the Canadian cannabis producer's second-quarter results , which were announced on Tuesday after the market closed.

So what

Analysts expected Tilray to post a net loss of $0.25 per share. However, the company actually reported an adjusted net loss of $0.32 per share. Without the adjustments, Tilray's net loss was $35.1 million, or $0.36 per share, compared to a net loss of $12.8 million, or $0.17 per share, in the second quarter of 2018.

Cannabis leaf on top of U.S. cash

Image source: Getty Images.

When a stock drops because of quarterly results, the smart thing for investors to do is to examine whether the bad news could be only temporary or impact the company for a longer period. In Tilray's case, it seems likely that the company will keep losing money for a while to come.

The problem isn't revenue. Tilray's Q2 sales nearly doubled from the previous quarter and were 371% higher than the prior-year period. The company should pick up even more momentum in the future with growth in the Canadian adult-use recreational marijuana market, international medical cannabis markets, and the North American hemp CBD market.

But it doesn't seem that Tilray's spending will level off anytime soon. Management hinted in the Q2 conference call that it will continue to invest heavily in developing new markets. That will likely translate to sustained net losses for the foreseeable future. However, those investments could pay off in higher revenue and potentially in achieving profitability down the road.

Now what

There are several things to watch closely with Tilray over the next several months. One is the opening of more retail locations in key Canadian provinces, including Ontario. This should help boost Tilray's recreational marijuana sales. Another is the launch of the Canadian cannabis derivatives market in October. Tilray appears to be in a good position to perform well in this market.

Outside of Canada, investors will want to keep their eyes on the maturing of European medical cannabis markets, particularly in Germany. Also, any actions taken by the U.S. Food and Drug Administration (FDA) with respect to hemp CBD regulations could significantly impact Tilray now that it owns hemp food company Manitoba Harvest.

Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake - it is coming.

Cannabis legalization is sweeping over North America - 10 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.

And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.

Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.

Simply click here to get the full story now.

Learn more

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Personal Finance , Stocks
Referenced Symbols: TLRY



More from Motley Fool

Subscribe







Motley Fool
Contributor:

Motley Fool

Market News, Investing












Research Brokers before you trade

Want to trade FX?