Beleaguered Cannabis Firm Tilray (TLRY) Finally Gains Momentum
Tilray (TLRY) stock jumps on strong earnings and an expanded addressable market
Following a torrential implosion of market value since February last year, cannabis firm Tilray (NASDAQ:TLRY, TSE:TLRY) finally gave its stakeholders a reason to smile. Management reported encouraging developments for its fiscal year 2022, including double-digit revenue growth and expectations to be cash flow positive in FY 2023. Further, Switzerland legalizing medical marijuana theoretically expands the total addressable market for cannabis companies. Tilray in particular specializes in exploring the therapeutic potential of the plant.
Find A Qualified Financial Advisor
Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.
According to the company’s press release, Tilray posted net revenue of $628 million, representing a 22% lift from the prior year’s tally. On a constant currency basis, net sales increased 29% from FY 2021’s result. In the fiscal fourth quarter (ended May 31, 2022), Tilray generated net revenue of $153 million, up 8% from the year-ago level. Adjusted for currency fluctuations, net revenue increased 14% to $163 million.
Additionally, management expects Tilray to generate $70 million to $80 million of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and be free cash flow positive in its operating business units in FY 2023.
Following the above disclosure in the early morning of July 28, TLRY stock gained 12% against the prior day’s session. Over the month between July 5 through Aug. 4, shares have swung higher by more than 24%.
Adding to the optimism for TLRY stock and other cannabis players is a Forbes report that Switzerland legalized medical cannabis starting from Aug. 1. As well, new legislation will allow Swiss companies to export medicinal marijuana for commercial purposes.
In September 2018, Tilray garnered major headlines when it announced a partnership with the University of California, San Diego. Under the arrangement, researchers at the University of California School of Medicine conducted a novel clinical trial to “examine the safety, efficacy and pharmacological properties of cannabis as a potential treatment for adults with essential tremor (ET). Currently, ET is treated using repurposed medications originally developed for high blood pressure or seizures. Surgery is another option.”
In its FY 2022 disclosure, Tilray stated that it leads the European medical cannabis sector, with 20% market share in Germany. Irwin D. Simon, Tilray Brands’ chairman and CEO, stated “Over the past year, we have accelerated the optimization of our operations and sharpened execution against our most profitable core business opportunities in medical, adult-use, wellness, and beverage-alcohol across Canada, Europe, and the U.S.”
Although investors have many positive details to chew on, Tilray acknowledged that it suffered a net loss of $457.8 million during fiscal Q4 compared to net income of $33.6 million in the prior-year quarter. To explain this dichotomy, Tilray mentioned challenges including “market conditions inclusive of higher rates of borrowing and lower foreign exchange rates.”
The admission of rising borrowing costs comes amid the consumer price index hitting 9.1% over the year ended June 2022. Also, the purchasing power of the dollar declined by 12.92% from the start of the COVID-19 pandemic through June of this year.
Article by Joshua Enomoto, Fintel