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Tilray’s Surprise Profit Attracts Investor Interest

By Investing.com (Brenda O'Farrell/Investing.com)Stock MarketsJan 11, 2022 08:15
ca.investing.com/analysis/tilrays-surprise-profit-attracts-investor-interest-200497782
Tilray’s Surprise Profit Attracts Investor Interest
By Investing.com (Brenda O'Farrell/Investing.com)   |  Jan 11, 2022 08:15
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Shares of Tilray (NASDAQ:TLRY) (TSX:TLRY) gained 13.5% yesterday on news that the cannabis grower posted a surprise second-quarter profit for the newly minted world’s largest cannabis producer, as measured by sales.


Tilray Daily
Tilray Daily

The company reported net income of US$6 million, a vast improvement over the US$89-million loss in the same period in the previous year. Although revenues jumped 20% to US$155 million, they fell short of average expected estimates of US$170.5 million.

The profit reported for the three-month period that ended Nov. 30 is a result, in part, because of the savings cobbled together from Tilray’s merger with Aphria. In fact, the savings came in about $20 million above the $80 million that had been telegraphed prior to the earnings report.

Sales of recreational cannabis fell by roughly 15% to US$49.5 million for the quarter, while recording a small uptick in its sales of medical cannabis as well as international sales.

Said CEO Irwin Simon:

“The totality of our performance, our prospects and our global platform make Tilray Brands’ opportunity as compelling as ever, driven by our success as a cannabis and lifestyle (consumer package goods) powerhouse and our relentless focus on delivering shareholder value."

Tilray and Aphria were officially merged in May 2021.

Tilray stock has lost about 43% in the last year.

CannTrust Saga Heads Into Possible ‘Wind-Down’ Phase

The first page of what could very well be the final chapter in the story chronicling the downward spiral of Canadian cannabis producer CannTrust Holdings (OTC:CNTTQ) (TSX:TRST) was penned last week, when the scandal-plagued company issued a statement outlining an amendment to its Compromise, Arrangement and Reorganization plan.

The most significant update included in the statement, which outlined information about a settlement of a class-action lawsuit and changes to its board, was an admission that the company is running short of cash reserves—very short.

In part, the statement read:

“Notwithstanding the significant progress made by the CannTrust Group in these proceedings, including successfully obtaining the reinstatement of its licences from Health Canada, restructuring its operations, resuming production and processing operations, reaching key settlements, and the development, approval and sanction of the CCAA Plan, the Canadian cannabis industry generally, and the CannTrust Group specifically, have faced challenges. As a result, the CannTrust Group does not have sufficient liquidity to operate beyond the near term.”

The admission of a liquidity shortfall has prompted the company to, as it states, “develop an orderly wind-down plan to maximize the value of its assets.”

The marijuana grower’s epic slide dates back several years now. In April 2020 it was delisted from New York Stock Exchange, followed by the delisting on the Toronto Stock Exchange in May 2020 in the wake of seeing its growing licenses suspended after the company was caught growing pot in unlicensed space in its growing facilities in Ontario.

Although its licenses were reinstated, the situation triggered legal problems with investors. And, according to the company’s statement last week, class-action suits initiated by investors have prompted CannTrust to set aside $50 million in a trust for class-action settlements and $2.7 million in a separate trust linked to creditor protection actions.

Former members of the company’s board of directors also still face charges that stem from the investigation into the growing of weed in unlicensed spaces.

Tilray’s Surprise Profit Attracts Investor Interest
 

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Tilray’s Surprise Profit Attracts Investor Interest

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