Canadian pharmaceutical and cannabis company Tilray (NASDAQ: TLRY) saw its stock surge by over 13% yesterday following an unexpected positive earnings report. Investors seem keen to grab a piece of the firm following its announcement of profitability. But is it the right time to invest? Let’s take a closer look.
What did Tilray report during its earnings call?
Tilray reported a net revenue increase of roughly 20%, with revenue hitting $155 million for the quarter. Net income also increased to $6 million, a welcome change from the loss of $89 million reported last quarter. Despite missing analyst revenue estimates of $170.55 million, this earnings report should be seen as a success for the company and its shareholders as it marks the first real foray into profitability or, at least, breaking even.
Should I invest in Tilray?
Yesterday’s earnings reports revealed a lot about the company to potential investors. A reverse merger with Aphria in May seems to have benefitted Tilray greatly by creating cost cuts, more of which are expected to follow this year.
The company also maintained its spot as the cannabis market leader for Canada despite a high level of market saturation, while also becoming the leader for medical cannabis in the German market with approximately 20% of the market share.
This will be of particular interest to investors, as the German government looks to accelerate the push to legalize recreational cannabis. Tilray will be extremely well-positioned to profit from this legislation as it is currently the only company supplying the German government with medical cannabis grown in-country.
Tilray has also invested heavily in its SweetWater Brewing arm, with the company recently entering the spirits category in Canada. SweetWater also acquired two craft-beer brands in late December in a further attempt to expand its operations.
Overall, Tilray offers a very intriguing chance to expose yourself to the burgeoning cannabis market. In comparison to a lot of its North American competitors, Tilray offers direct exposure to the European market while also maintaining some revenue diversity through its brewing and wellness segments. Increased legalization both nationally and internationally is essential to ensure future growth, but as the company finally reaches profitability it certainly offers some potential upside to any investors with sizeable risk tolerance.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.