Tilray (TLRY) will report its first quarter as
a public company this afternoon, and management will host a call at 16:30 p.m.
Tilray is a global pioneer in cannabis research, cultivation, processing, and distribution, serving tens of thousands of patients in ten countries spanning five continents.
The stock is up over 200% since pricing 9 mln shares at $17 in mid-July, above the $14-16 expected range. Speculators are looking to take advantage of the nascent cannabis industry by investing in this vertically integrated leader in the space.
The stock is up over 110% since beverage giant Constellation Brands (STZ) invested an additional $4 bln in cannabis peer Canopy Growth (CGC) two weeks ago. That investment went a long way in validating the massive marijuana opportunity.
Tilray is expected to report Q2 EPS of ($0.09) on revenue of just $9 mln. Wall Street expects revenue to grow 112% to $43.5 mln this year and 269% to $161 mln next year.
Cannabis will officially be legal for recreational purposes in the company's home country of Canada starting in October. It seems like just a matter of time before additional jurisdictions open up globally.
Tilray has a market cap of ~$4.9 bln, putting the valuation at ~110x fiscal 2018 sales estimates or ~30x next year's seemingly aggressive sales estimates. Canopy Growth trades at ~40x (March 2019) sales estimates or ~14x next year's sales.
This creates some awfully high expectations heading in to the company's first quarterly report. Investors are clearly focused on the long-term opportunity in the budding space.
Private Equity firm Privateer Holdings owns 98% of Tilray. The float (shares available to trade) is a minuscule 1 million shares, which has likely exacerbated the recent surge in the stock. Momentum traders likely piled in to the stock assessing the supply-demand imbalance. Capital IQ data indicates that the short interest is actually higher than the float, which is quite puzzling.
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