Tilray Update #2
Tilray ($TLRY) had quite the rise in February 2021 as the stock rose to nearly $67 from momentum around the cannabis industry and wall street bets.
After these artificially inflating events, the stock dropped quickly and it’s now trading around $20.
$TLRY just reported better than expected earnings in 4Q2020. Revenue came in at $56.6 million, up 20.5% from a year ago and 10% from the prior quarter. The most important news was that the company finally was able to achieve EBITDA (earnings before interest, taxes, depreciation, and amortization) profitability.
$TLRY reported that it achieved its stated goal of becoming breakeven or positive EBITDA. It made $2.2 million in adjusted EBITDA during 2020 Q2. This is compared to negative $35.3 million in adjusted EBITDA last year.
I’ve seen people on twitter comment that the cannabis companies from Canada such as $TLRY have no shot at competing in the U.S. Investors take this position because they think U.S. companies are best positioned to manage the regulatory framework of the U.S. as well as have the needed infrastructure domestically.
What makes me excited about $TLRY is that they are merging with $APHA which will make them the largest weed company in the world by revenue globally. $TLRY merger with $APHA, announced in December is set to close in Q2 2021.
It will be important to see how the merger performs. Will they be able to cut costs and expand revenue? If so, the company could justify a high valuation with growth potential.
If not, the stock could likely get crushed given the short interest out there.
As I saw the stock crash down from the mid 60s, I had to ask myself why I still wanted to hold?
For me, I think $TLRY is well positioned over the next 4 years of the Biden administration to capitalize on the weed industry in the US and expand its revenue with continued growth globally.