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Analysis of Tilray: She was headed for the stars, now she's fighting for survival

Jamie Cameron
6. 4. 2023
4 min read

The marijuana segment has huge potential. Companies may very well ride the wave of growth. But if they can wait for the time when that growth comes. The super famous name of Tilray could very well be in trouble!

Basic overview

Tilray $TLRY-1.1% is a Canadian company that specializes in the production and distribution of medicinal and recreational cannabis products. Founded in 2013, the company is one of the leading marijuana companies in Canada and the United States. The company's main revenue comes from the sale of cannabis products, including the plants themselves, extracts and oils. Tilray is looking to expand into other areas such as medical products and provide research services to improve the quality and efficacy of cannabis products.

Tilray is also looking to grow its business internationally and expand into new markets. The company is currently operating in several European countries and has plans to expand into other areas. However, Tilray has been floundering a bit and is also facing some pretty daunting challenges.

Regulation: Tilray operates in the cannabis industry, which is still regulated by various laws and regulations in different countries. Changes in the regulatory environment may affect the Company's ability to operate its business and may also affect the price and availability of its products.

Competition: The market for cannabis and cannabis products is highly competitive, which means that Tilray must compete with many other companies in the market. This can lead to lower prices and reduced profits.

Risks associated with production: Cannabis and cannabis products can be dangerous if they are not produced and tested well. If a company's products are found to be unsafe or of poor quality, this can lead to a loss of customer confidence and damage to the company's reputation.

Competition

Tilray's competition for cannabis products is very strong and dynamic. There are many companies in the cannabis and hemp products market that are trying to gain market share and compete with each other. For example:

Canopy Growth Corp: a Canadian company that specializes in the production and distribution of cannabis products. Canopy Growth Corp is one of the largest companies in the cannabis market and has an extensive distribution network and a strong brand.

Aurora Cannabis Inc: Canadian company that focuses on the manufacture and distribution of cannabis products for recreational and medical use. Aurora Cannabis has an extensive distribution network and a strong demand for its products.

Cronos Group Inc: Canadian company that specializes in the manufacture and distribution of cannabis products for recreational and medical use. Cronos Group has a strong market position and is developing internationally.

GW Pharmaceuticals plc: A British company that specializes in the development of medicinal cannabis products for the treatment of various diseases. GW Pharmaceuticals has several successful drugs on the market and a strong position in the treatment of epilepsy.

Financials

Current situation

Tilray shares are down nearly 89% from their all-time high. Still, given the current state of its business, it is far from cheap. Tilray is still heavily dependent on regular capital raises to fund its existing operations. Its ongoing efforts to cut costs and reach more lucrative markets may one day bear fruit, but that day is far in the future. For now, Tilray is a bet with an uncertain future.

The price drop is huge

The company reported net sales of $144.1 million, down 7.1% from the same period last year and 7.24% below consensus estimates. This translated into a net loss of $69.5 million, or -$0.11. Net cash decreased by $300.4 million, leaving $433.5 million in cash and equivalents at the end of the quarter.

Tilray's non-GAAP operating cash flow was $29.2 million and non-GAAP free cash flow was $25.4 million.

Unfortunately, EPS is in line with other metrics...Source

Like many other Canadian cannabis operators, Tilray has been looking to expand into other, more lucrative markets in recent years. The company has already established itself in many foreign markets and now boasts a presence on three continents. Last year, Tilray focused particularly on Germany. Already the largest cannabis producer in Europe's richest country, Tilray's German pivot has secured it around 20% of the total market.

Analysts are positive. In truth, though, I have little idea why. Source

The marijuana segment could be interesting. But unfortunately I don't see the huge growth potential that would save the company from such a strange situation. What about you? Do you believe in this sector? What is your favorite here?

Disclaimer: This is by no means an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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