How did Tilray’s fiscal third-quarter earnings report go?

Canadian cannabis company Tilray [TLRY] reported its fiscal third quarter 2022 earnings last night and has seen its stock pop by over 3% as a result. A continued congressional push towards the decriminalisation of its primary product is proving prosperous, so any earnings win was likely to see Tilray rise.

Let’s take a closer look at the earnings report.

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What did Tilray report in its earnings call?

Tilray posted adjusted earnings per share (EPS) of $0.09 against an expected loss of $0.08 per share. This stellar earnings beat was slightly dampened, however, by revenue figures of $152m, which just missed analyst estimates of $156.2m. This represented net revenue growth of 23% — largely driven by cannabis and alcoholic beverage revenue growth of 32% and 64%, respectively.

The company also made significant strides in extending its market reach, with international cannabis revenue growing by over 4,000%. Couple this with Tilray maintaining its position as the outright market leader in Canada with a 10.2% market share, and it becomes easy to see why investors might be gravitating towards the stock.

So should I invest in Tilray?

A lot of Tilray’s immediate future will be dependent on the US Senate passing the MORE Act. This would result in cannabis being taken off of the federally controlled substance list and would allow individual states to legalise it independently. Making international inroads is obviously important — and Tilray has been doing this brilliantly in the last quarter — but being able to scale in the US would drastically improve its sales capacity while sidestepping a lot of logistical stress.

CEO Irwin Simon also stated that the company is on track to hit $4bn in revenue by the end of its fiscal 2024. Diversifying its market opportunities by developing Sweetwater Brewing has already proven popular with investors, and Tilray looks poised to continue that through its launch of Tilray Medical in February. This global division will focus on “international medical cannabis advocacy” and “a portfolio of EU GMP-certified medical brands and products”.

Despite these green shoots, it must be noted that Tilray has had a relatively poor run of it over the past year, with its stock down over 63% in 12 months. Investors will be hoping that changing legislation will promote renewed growth but any block to this could see Tilray continue to stagnate.

On top of this, despite signs of growth, the cannabis industry remains volatile as governments continue to wrestle with the prospect of full-scale decriminalisation.

Tilray could be a potential play for an investor with a high tolerance for risk, but perhaps it would be better off staying on the sidelines for now for anyone with more aversion to high-risk companies.


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