TILRAY Q4 2018 Earning – Eye Watering Stock Price Hard To Justify
Surely the fourth quarter of 2018 is something that the administration of Tilray wants to forget. And it is difficult to justify the price of the shares. Being that the income of C $ 20.9 million did not reach even the lower limit of the income estimates and the net loss of $ 0.33/sh was also below expectations.
It should be noted that not everything is bad and is that on the one hand, the administration has shown that they can sign interesting partnerships with some of the largest consumer goods companies in the world. However, financial results have not yet proven that this is an administration team that knows how to grow and sell cannabis efficiently.
A relevant fact is that Tilray is quoted at a price well above the income generated by the greenhouses, which indicates that the market expects the management team to find other large sources of income in the future.
It is established as a problem especially for investors who still do not get details about where these revenues will come from and how big they can be. Similarly, the income and profitability prospects of Tilray are even more uncertain than those of Canopy, Aurora, and Cronos, with similar prices.
It is troubling that Tilray has the third largest market capitalization in cannabis. However, it is not even one of the four main producers in Canada and, unlike its colleagues, it does not own its own brands, which are mostly licensed through third parties.
It is necessary to highlight the fact that Tilray sold 2,053 kg in the first full quarter of recreational sales. Representing an increase of 27% compared to the previous quarter, growth much slower than that of the peers who saw their volumes increase by an average of 230% in the first full quarter of recreational sales.
In this way, the drop in revenue per gram and gross margins will continue for at least another quarter, as the company continues to buy additional wholesale products from other producers licensed to meet the demand.
Source: Scott Willis | Grizzle