Don’t Dread Tilray’s Weakness

You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.

Friends,

Today was the first day in two months that a large cannabis company that reports its financials in U.S. dollars reported, and the report was not good. Tilray Brands reported overall revenue growth in its fiscal Q1, but its cannabis revenue plunged. The company slid down the Revenue Rankings page, with $61.2 million in cannabis revenue falling from 12th place to 14th on the 15% sequential and 13% annual decline.

Canada has seen its overall cannabis sales growth slow as it has become a mature legal market for adult-use. In our most recent monthly update, we pointed to the rebound in July. Still, though, growth has been quite slow. The July sales are down from the monthly peak in August of 2023 at C$469 million, and  they were down 3.9% from a year earlier. So far in 2024, Canadian cannabis sales are down about 0.8% year-to-date.

Looking at the data for the quarter that Tilray Brands reported is challenged by the fact that StatsCan hasn’t yet released the August data for the country. Canadian cannabis sales in the first two months of Tilray’s fiscal Q1 fell 2.1%. Tilray’s cannabis sales fell 13%, which is a lot worse than the overall market move. Additionally, it was helped by German medical cannabis sales growth, according to its press release. Overall revenue fell way short of what was expected, and adjusted EBITDA for the company, while positive, was substantially lower than what was expected.

I recently discussed some Canadian LP bargains here, and they have declined somewhat since that newsletter. I continue to like Organigram and Village Farms, which comprise now 40% of my Beat the Global Cannabis Stock Index model portfolio at 420 Investor. The NCV Canadian Cannabis LP Index closed at a new all-time low yesterday.

In that newsletter article, I discussed Tilray Brands and Canopy Growth as being overvalued and potentially weighing on the sub-sector, and I have written an article recently at Seeking Alpha discussing how Tilray will keep declining. The company is about to start its conference call, and it hasn’t yet filed its 10-Q. I expect that TLRY could post an all-time low, taking out the prior low of $1.50 from June 2023. Yes, the stock is down a lot from its spike above $5 in late 2022, but it looks expensive and is not a good cannabis company. Investors have a chance to buy some very cheap Canadian LPs, though they are still up year-to-date. I have my eyes on Cronos Group, which I don’t currently include in my model portfolio. Here are the year-to-date returns for the five LPs that I include on my Focus List at 420 Investor:

There are a lot of opportunities for cannabis investors that go beyond the two Canadian LPs that I like so much right now, both in Canada and in the U.S. Cannabis investors need to shed their love for Tilray, in my view.

This week’s newsletter is sponsored by The Dragich Law Firm PLLC

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past week:

Exclusives

Florida Medical Cannabis Market Faces a Big Risk

Tilray Cannabis Revenue Falls 13% in FY25-Q1

To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer the Canadian Cannabis LP Index, the American Cannabis Operator Index and the Ancillary Cannabis Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan

Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email