Is Tilray’s stock a buying opportunity after the price collapsed?

By:
on Dec 17, 2021
  • Tilray's stock has collapsed
  • Tilray and Aphria completed a merger
  • Tilray has solid growth prospects

Tilray, Inc. (NASDAQ: TLRY) shares have weakened from $10.26 to $7.4 since December 01, 2021, and the current price stands at $7.99.

Pioneer in cannabis research

Tilray is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, Australia, the United States, Europe, and Latin America.

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The company supports over twenty brands, including comprehensive cannabis offerings, hemp-based foods, and alcoholic beverages.

Tilray is a pioneer in cannabis research, cultivation, and distribution while it remains well-positioned to pursue international growth opportunities with its strong medical cannabis brands.

It is important to mention that Tilray and Aphria completed a merger in May 2021, and under this business combination, the combined company continues to operate as Tilray.

This merger brings together two highly complementary businesses to create the leading cannabis-focused CPG company with the largest global geographic footprint in the industry.

Tilray currently has a market cap of approximately $3.86 billion, and the company reported solid first fiscal quarter results in October.

Total revenue has increased by 43% Y/Y to $168 million, slightly below expectations, while the GAAP earnings per share for the first fiscal quarter was -$0.08 (misses by $0.03).

The increase was driven by a 38% growth in net cannabis revenue to $70 million despite continued impacts from coronavirus in Canada as retail cannabis stores only began opening in mid-June.

Adjusted EBITDA for the first quarter of 2022 was $12.7 million, which represents 58% growth compared to the first fiscal quarter of 2021.

Strong numbers were partially influenced by the merger between Tilray and Aphria, while it is also important to say that the combined company achieved $55 million in cost-savings from Aphria and Tilray synergies.

The first-quarter earnings results showed that Tilray is moving in the right direction, and the company’s management expects another solid quarter. Irwin D. Simon, Tilray’s Chairman, and Chief Executive Officer, added:

We believe we are ideally positioned to succeed due to our global consumer-packaged goods expertise and scale, our diverse portfolio of brands, our reputation as a trusted supplier of high-quality cannabis, battle-tested leadership, and a relentless focus on driving sustainable shareholder value.

Looking forward, Tilray has solid growth prospects, the company’s management is taking actions to improve the profitability outlook, and with a market capitalization of $3.86 billion, shares of this company are reasonably valued.

$9 represents current resistance

Tilray’s stock price has fallen more than 85% after reaching the highest level in 2021 of $67 on February 10.

Data source: tradingview.com

The strong support level stands at $7, and if the price falls below this level, it would be a strong “sell” signal.

On the other side, if the price jumps above $9 resistance, it would signal trading shares, and the next target could be at $10 or even above.

Summary

Tilray is a leading global cannabis-lifestyle and consumer packaged goods company that supports over twenty brands, including comprehensive cannabis offerings, hemp-based foods, and alcoholic beverages. Tilray’s stock price has fallen more than 85% after reaching the highest level in 2021, and at the current price, it could provide solid returns for long-term investors.

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