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Is Tilray Finally a Buy? | The Mesh Report

Is Tilray Finally a Buy?

Growth Stock Network May 16, 2019 Comments Off on Is Tilray Finally a Buy?

Canada’s top pot producers have all seen their valuations shoot higher this year — that is, except Tilray (NASDAQ:TLRY). Over the first five months of the year, Tilray’s market cap has slipped by an unsightly 25%. Worse still, the company’s valuation has now been cut in half from its former high.

However, this downward trend might finally be nearing an end. Yesterday, Tilray posted better-than-expected first-quarter numbers that might give its stock a much-needed jolt heading into the second half of the year. Should investors buy into this strong quarterly performance? Let’s dig deeper to find out.

The positives

Tilray’s top line soared by a whopping 195.1% in the first quarter to $23 million, relative to the prior-year period. The combination of recreational adult-use products, medical cannabis, Manitoba Harvest’s hemp-based foods, and international cannabis sales all helped to drive this hefty surge in year-over-year sales. Perhaps the best part is that Tilray’s first-quarter sales came in far higher than those of Cronos Group (NASDAQ:CRON) — a chief competitor in the emerging cannabis space.

Tilray also plowed a noteworthy $32.6 million to expand its production facilities in Canada during the first quarter. This sizable investment will reportedly boost the company’s production capacity by 203,000 square feet across three of its facilities in Nanaimo, British Columbia, Leamington, Ontario, and London, Ontario. Tilray’s worldwide production capacity is now slated to rise to 1.3 million square feet, up from 1.1 million square feet prior to this expansion project.

The pot company also highlighted its recently formed strategic partnership with Authentic Brands Group. This alliance immediately gave Tilray access to a portfolio of more than 50 iconic brands, and a North American distribution network. The two companies expect co-branded CBD products from this partnership to hit the market in the second half of 2019 in both the U.S. and Canada.

The negatives

Despite this stately rise in sales, Tilray still posted a net loss of $30.3 million for the three-month period. That’s not surprising in light of the company’s aggressive expansion plans, but it is a net loss nonetheless.

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