Tilray Drops Following Q3 Results

Canadian cannabis company Tilray Inc TLRY reported third-quarter revenue Tuesday that fell nearly in line with estimates, with a bottom-line beat.

The stock inched higher after the closing bell before giving up the gains and slipping into the red in after hours trading. 

What Happened

Tilray's revenue surged by 85.5 percent on the year to $10.05 million, which was almost in line with the consensus estimate of $10.12 million.

The reported a net loss of 8 cents per share, which was narrower than the 12-cent loss expected by the Street.

The revenue growth came on the back of more cannabis sales, with Tilray reporting sales volume of 3,556 pounds in Q3 versus 1,507 pounds a year earlier.  

The higher volume offset the revenue decline from a lower average net selling price, which fell from $9.31 per gram in the same quarter last year to $6.21 per gram.

The lower prices were mostly due to a higher share of bulk sales, according to Tilray.

The company highlighted a number of developments,  such as the acquisition of Alef Biotechnology, which gave Tilray access to the Chilean medical cannabis market; the import of CBD oil to the UK; and regulatory approval that would allow it to export cannabis flower from Canada to Germany.

Why It's Important

Tilray went public in July, becoming the first pure-play marijuana company to list its stock on a major American exchange. Tilray's shares skyrocketed after the IPO, which prompted many critics to call the stock overvalued.

Tuesday's results will be closely assessed by investors and analysts to understand whether Tilray is on track to deliver on its growth promises; higher revenue and sales volume are positive signs. Industry peers like Aurora Cannabis Inc ACB and Cronos Group Inc CRON showed larger revenue growth in their recent financial reports.

What's Next

Tilray's strategy to position itself as a global cannabis company seems to be well underway, judging by the approval to export to Germany, which is one of the most important marijuana markets outside North America; exports to the UK and Australia; and expansion into Chile and Latin America. The company has entered into eight supply agreements for the Canadian recreational market.

Tilray shares were down 2.84 percent at $108.38 in after hours trading at the time of publication. 

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