Aphria & Tilray’s Recent Merger
Tilray (NASDAQ: TLRY) is a leading cannabis consumer products company with operations in the United States, Canada, Europe, Australia, and more. They are striving to be the most trusted partner for their patients and consumers by providing them with innovative and high-quality products to match their needs.
Compared to competitors, Tilray’s experience is unmatched. They have committed to research that improves the quality of all cannabis consumer products and creates beneficial therapeutics to support those in need.
Right now, cannabis is still heavily misunderstood, hence why Tilray is leading groundbreaking research to understand the therapeutic risks and benefits of cannabinoid-based medicines.
Cannabis research, cultivation, and distribution lays the foundation in Tilray’s business model for hemp-based foods, alcoholic beverages, and more for over 20 brands worldwide. A product portfolio as strong as Tilray’s is challenging to disrupt, especially because they are so diversified.
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Tilray and another well-known cannabis consumer products company Aphria, have decided to merge to form one company. This merger hopes to capitalize on more of the cannabis market share. This merger has made Tilray the largest consumer cannabis company in terms of revenue.
Product and brand portfolios have also become fused, creating a tight grasp on the overall market. These brands are placed in various subsequent industries of the cannabis market. These include flowers, oils, vape capsules, craft beer, CBD consumer products, and more to suit an increasing amount of industry applications globally.
This merger has leveraged the capabilities of both companies by merging supply chains and creating a network of interconnected operations to expand at a greater pace compared to their rivals. Tilray has gained a substantial lead which is fantastic to see.
Upcoming Challenges
Throughout 2020, many businesses were challenged by the economically damaged climate. Tilray was surprisingly able to recover and continue business as usual which has kept shareholder’s hopes high.
Since Tilray stocks peak in 2018, the stock is down over 90%. Some investors have gotten scared to go near these stocks since the cannabis industry bubble burst, even though fundamentals have been improving dramatically over the last couple of years.
Although, there may be some competition coming into this new flourishing industry.
Previously, growth was accelerating at a rapid pace although, that may begin to slow down as competitors bring cheaper products to market, which will entail lower sales. Profit margins may also dial back because of the decreasing average price of cannabis goods in many regions.
Tilray does have an advantage because of its diversified product portfolio, they will gain exposure to new industry trends and developments before others.
Growth & Future
Legalization across North America and other markets is critical to Tilray’s success and growth prior to and after the merger. Without it, we could begin to see revenues flatten, potentially causing another worry for their shareholders. In Tilray’s case, it may be unlikely because of their diversified revenue streams.
However, this merger was a great move in a variety of ways. This merger will allow further expansion into the already opened markets for cannabis products so consumers can become familiar with the brands owned by Tilray. This merger will also allow a tighter industry grip, potentially squeezing out competitors and taking their local market share.
The cannabis market is also growing at a sustainable rate worldwide, allowing Tilray an even more sizable piece of the overall industry. This creates a fairly optimistic outlook for Tilray, assuming no unpredictable events occur, we may see them continue to maintain their industry-leading status.
Overall, confidence in Tilray should begin to return because fundamentals are improving greatly, the industry is growing, and there’s an increasing amount of use-cases for cannabis-based products in the future. This is what makes Tilray stand out as an industry innovator.
Tilray has good fundamentals for future growth provided the industry has a favorable rally. This merger really puts Tilray’s business model into focus.
Cannabis investing is still a relatively new industry and asset class meaning there is still a lot volatility in the marketplace and there are tons of companies that are not meeting growth expectations. there are Option trading strategies that will allow you to gain exposure to this market without risking a huge amount of capital but still be able to participate in some growth from this stock. Continue to follow Money Midnight for some insight into options trading.
As always do your own due diligence and invest based upon your own risk appetite and consult your own financial advisor for the right investment strategy for your specific needs.
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