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Tilray: Not Getting Better

Mar. 04, 2020 9:43 PM ETTilray Brands, Inc. (TLRY), TLRY:CA10 Comments


  • Tilray missed Q4 targets by a wide margin.
  • The company forecasts using most of the outstanding cash during 2020.
  • The forecast doesn't show the cannabis company reaching cash flow positive until Q4'20 or Q1'21 while requiring quarterly revenues to nearly double.
  • The stock isn't investable despite new all-time lows.
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The Tilray (NASDAQ:TLRY) quarterly results reinforce my theory from the beginning of the cannabis investment story. The Canadian cannabis LP is chasing so many different business opportunities around the globe that the end results are always disappointing. My investment thesis remains negative on the stock as the 10% employee cut isn't enough to turn the financial prospects around in the near term.

Tilray facilityImage Source: Tilray website

Another Disappointing Quarter

For Q4, Tilray missed revenue estimates by a startling $8.6 million. Excluding the hemp business bought last year, the company only generated $28.3 million in cannabis revenue in the quarter. Those revenues were down a shocking $7.2 million from the prior quarter despite the introduction of Cannabis 2.0 products in December.

Source: Tilray Q4'19 earnings release

In total, Tilray basically reported quarterly revenues back equivalent with Q2 when the company reached revenues of $45.9 million. The major warning back during the sales ramp was the reliance on bulk sales of $6.8 million. The large Canadian cannabis companies didn't build global operations to dump product on the bulk market.

As investors can see the different business categories all bounce around. The company saw medical cannabis and bulk sales peak in Q3 and the hemp business hit a high back in Q2. In a cannabis market where sales are generally rising, Tilray seems to be chasing too many businesses with disastrous results.

On the earnings call, CEO Brendan Kennedy highlighted some of the products availability that highlights my major concerns of Tilray being unable to manage the business. The company seems to shift focus to one business segment and loses out in the other segment:

  • Medical cannabis products available in 15 countries and 5 continents.
  • Hemp products available in over 17,000 retail doors in 20 countries.
  • Facilities and offices in Canada, U.S., Europe, Australia and Latin

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This article was written by

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Stone Fox Capital Advisors, LLC is a registered investment advisor founded in 2010. Mark Holder graduated from the University of Tulsa with a double major in accounting & finance. Mark has his Series 65 and is also a CPA.

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