Tilray Seeking to Expand Globally
Tilray Inc. (NASDAQ: TLRY) is a leader in cannabis research, cultivation, processing, and distribution in the world. Being the pioneer and first GMP-certified medical cannabis producer Tilray supplies cannabis flower and extract products to patients, physicians, pharmacies, hospitals, governments in the US.
The product line of Tilray Inc focuses on active ingredients and standardized preparations. Tilray uses formulations and delivery formats which intends to allow for consistent and measured dosing. The research and development program of TLRY participates in clinical trials. As the laws and regulations regarding the usage of cannabis is evolving TLRY is actively seeking to expand its operations around the globe.
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With operations in Australia, Canada, Europe, Latin America and US Tilray has already cemented its presence as a global leader in this industry. The merger of Tilray with Aphria Inc is expected to close in Q2 2021, which will help Tilray to be World’s largest cannabis company.
The stock reached levels of close to 150 USD in Oct 2018 and has been going down in tandem with other cannabis companies in US since then. It went below the 4 USD mark 2020 during the pandemic but has revived significantly after that to go past the level of 30 USD in 2021. Though it is still not close to its lifetime price high, the prospects seem attractive encouraging a closer look at the fundamentals to spot future growth opportunities
Objectively looking at TLRY’s Fundamentals
With market cap of 5.28B TLRY is one of the biggest cannabis company in the US by market cap. Going by the pure fundamentals as of 2021, the profit margin is -141% and the operating margin is around -67%. Also, the return on asset (ROA) and return on equity (ROE) both are negative indicating potential weak fundamentals of the stock as of today.
However, one of the biggest advantages towards the later part of 2021 which is after the merger with Aphria Inc is going to be the overall increase in the revenue and potential increase in the bottom-line. Also, Tilray has strong cash position in the balance sheet which stands at 205M as of Q1, 2021.
From a revenue standpoint it has been steadily increasing for the last 4 years i.e., from revenue of 20M in 2017 it reached 210M revenue in 2020. So TLRY is basically consolidating its position as a dominant player in this industry and going to sustain in the long run. As relatively smaller players make way for these larger players the oligopoly is going to sustain in the long run.
In summary, the stock may not be looking great fundamentally as of today, but the Merger and Acquisition with Aphria Inc AND it’s increasing trend of improving the top line definitely makes this a stock to watch out for.