TLRY: Why are Shares of Tilray Trading Down 7% Today?

Yesterday, on May 12th, Tilray (TLRY - Get Rating) reported financial results for the first quarter ending March 31, 2020.

The company reported a net loss of $184.1 million, or $1.73 a share, compared to a loss of $29.4 million, or $0.31, for the first quarter 2019.

Quarterly revenue increased 126% to $52.1 million, compared to the first quarter of 2019 and 11% sequentially from the fourth Quarter of 2019.

Analysts were expecting the company to report a GAAP net loss of $0.44 a share on revenue of $49.5 million.

As a result of their earnings, TLRY’s stock is trading down 7% today.

In their earnings release, the company said they implemented COVID-19 related protocols to ensure the health and safety of their staff during these tough times.

TLRY said it remains focused on achieving positive adjusted EBITDA by the end of the fourth quarter of 2020.

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Total kilograms of cannabis sold jumped 92.4% to 5,794 kilograms, which were led by recreational sales. The average net selling price per gram of cannabis decreased by 5.7% to $5.28 due to a shift in product mix.

TLRY’s CEO Brendan Kennedy said, “We are pleased to report strong sequential quarterly revenue growth across each of our core business segments for the first quarter of 2020. We remain focused on executing on our long-term growth opportunities and our goal of generating positive Adjusted EBITDA by the end of the fourth quarter. As evidenced by our International Medical sales in the quarter, we expect this segment to demonstrate continued growth and positively impact margins. During and since the first quarter, we took significant steps to drive efficiencies across our business, enabling us to realize annualized cost savings of approximately $40 million compared to the fourth quarter 2019 run rates. While the positive impact of these actions are not fully reflected in this quarter’s results, they will become more clearly evident over the course of this year.”

Based on the numbers it’s clear that TLRY still has a long way to go before they become profitable. The company burned through almost $200 million worth of cash this quarter ($1.78 x 110,031,225 shares outstanding = $195,855,580) which is a substantial amount of money. Cash burn and dilution has always been an issue for TLRY and if they can’t get their SG&A costs down substantially from this level, the company may have a hard time achieving profitability.

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TLRY shares were trading at $7.62 per share on Tuesday afternoon, down $0.46 (-5.69%). Year-to-date, TLRY has declined -55.52%, versus a -9.02% rise in the benchmark S&P 500 index during the same period.

About the Author: Aaron Missere

Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...