Tilray’s CEO in focus
Last week, Tilray’s (TLRY) CEO claimed that some cannabis companies have misled investors by inflating their capacity metrics, which could have skewed valuations upwards. This is not the first time we are hearing allegations about cannabis companies misleading investors. Last year, Aphria (APHA) came under fire for acquiring a business in LATAM (Latin America) at inflated prices. Soon after that, Aphria’s stock tanked and underwent massive restructuring. In a bid to save the company’s image, the then CEO Vic Neufeld stepped down amid the controversy.
Truth finds its way out
Short-term gains for cannabis companies and their executives could translate into long-term pains when the truth makes its way out in the open. Aphria, for example, reported a write-down of the LATAM business in its recent earnings release on April 15. The stock has lost nearly 20% since then as of May 17. YTD, Aphria has recorded a gain of just about 17%.
Tilray, which also reported its earnings last week, missed the expectations with a loss per share of $0.32, which missed the estimate of a $0.24 loss per share. The stock lost nearly 2.7% since then. Tilray has already been on a declining trend with the company delivering negative monthly returns in three of the five recent months. YTD, the stock has lost nearly 35% of its value.
In comparison, peers Canopy Growth (WEED) and Aurora Cannabis (ACB) delivered YTD returns of 64% and 73%, respectively. The sector benchmark Horizons Marijuana Life Sciences ETF (HMMJ) has delivered about 40% returns YTD.