Why Did Tilray Stock Rise More than 10% Yesterday?


Aug. 22 2019, Updated 11:18 a.m. ET

Tilray (TLRY) stock rose 10.4% on Wednesday. According to Bloomberg, the company expects to be profitable in Canada in the next quarter or two. In an interview with Bloomberg, Tilray’s CEO, Brendan Kennedy, mentioned that the company expects to post a profit in Europe in the next two or three quarters.

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Why did Tilray stock rise?

Kennedy’s comments were a pleasant surprise for investors. Overall, investors were disappointed with the company’s recent results. Tilray’s revenues rose 371.1% year-over-year to $45.9 million in the second quarter. The company’s top line benefited from the Manitoba Harvest acquisition, the legalization of the Canadian adult-use market, and higher international revenues. However, Tilray reported a higher-than-expected loss per share of $0.32 compared to analysts’ expectation of loss per share of $0.25.

In the interview with Bloomberg, Kennedy said, “We’ll continue to invest in new regions and new countries, but on an existing basis in terms of our existing footprint, we see profitability within the next half year to year.”

New deal to export medical cannabis

In another positive development on Wednesday, Tilray announced a supply agreement with Cannamedical Pharma GmbH to export $3.3 million of medical cannabis from Portugal to Germany. The export will mark the first shipment from Tilray’s EU Campus in Portugal. Tilray has invested about 20 million euros in the facility.

In May, Tilray Portugal was granted a manufacturing license and initial GMP-certification. The approval allows the company to manufacture and export GMP-certified dried cannabis for medical products.

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Earlier in August, Tilray announced an agreement with Esporão to increase its international export capacity. The agreement gives Tilray an additional 20 hectares of outdoor cultivation space in Portugal. The company already has 5 hectares of indoor and outdoor cultivation space and 6,500 square meters of manufacturing, processing and research facilities at its EU Campus in Portugal.

Tilray is ramping up its production capacity to cater to the growing demand in international markets. The company expects to generate revenues from its EU campus by the end of this year.

Tilray’s stock movement compared to its peers

Tilray stock has fallen about 30% since it announced its second-quarter results after the markets closed on August 13. As of Wednesday, the stock has fallen 54.2% on a YTD (year-to-date) basis. So far, Canopy Growth (WEED) stock has fallen 3.4% this year. Weak results pulled down Canopy Growth stock. Notably, the company generated an adjusted EBITDA of -92 million Canadian dollars in the first quarter of fiscal 2020.

Aphria (APHA) and Cronos Group stocks have risen 11.1% and 11.0%, respectively, YTD as of Wednesday. Aphria reported an adjusted EBITDA of 0.21 Canadian dollars for the fourth quarter of fiscal 2019. Aphria’s strategic initiatives helped it generate positive earnings. To learn more, read Aphria’s Strategic Growth Initiatives Drive APHA Stock.

As of Wednesday, five of the 16 analysts following Tilray stock had a “buy” recommendation. Ten analysts had a “hold” recommendation, while one had a “sell” recommendation. The average 12-month target price of $64.40 reflects an upside of about 99% in the stock.

To learn more about Tilray’s plans in the vape market, read Tilray on Vape, FDA and the US Market.


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