Tilray earnings preview: Investors need more than just production expansion

Though the marijuana industry has been seeing overall tremendous growth, one prominent name has been pulling it down – Tilray (NASDAQ: TLRY). Even as other pot stocks gained considerably since the beginning of this year, Tilray has plunged over 36%, much to the annoyance of investors.

The Canadian marijuana firm is slated to report first-quarter earnings results on May 14, Tuesday after the market closes. Analysts are expecting another quarterly loss, this time of 25 cents per share, as the company continues to invest heavily on production expansion. Revenues are estimated to be $21.6 million, compared to $15.5 million it reported in the prior sequential quarter.

Reports of production ramps have already been priced into the stock, which is still struggling to reverse its downward trajectory. Despite the ramps, Tilray continues to underperform when compared to peers such as Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE: ACB).

Investors are also concerned over Tilray’s inability to turn profitable, despite some of its peers starting to make money. During the last reported quarter, the company had reported a net loss of $31 million, or $0.33 per share, wider than the previous year’s loss of $3 million, or $0.04 per share.

The big beverage partnership

The partnership with Budweiser-parent Anheuser Busch Inbev (NYSE: BUD) to produce cannabis-based beverages had been touted as the biggest USP of Tilray going forward. However, Wall Street has started losing interest in this following reports that Anheuser’s lack of materialistic commitment towards this project.

Meanwhile, New Age Beverages Corporation (NASDAQ: NBEV) has made considerable headway in this regard, by inking a deal to develop and distribute Marley branded cannabis-infused beverages.

READ: THE QUESTION EVERY POT INVESTOR ASKS HIMSELF – AURORA CANNABIS OR HEXO?

Tilray has made other promising partnerships as well, including ones with Novartis (NYSE: NVS) and Authentic Brands Group. But its high time the partnerships start showing up benefits in the balance sheet as well.

Consecutive bearish comments from analysts and estimate revisions have hurt the confidence of investors in the stock, at least for the short-term.

Tilray management has a mammoth job of convincing people to stay invested as it heads to the conference call on Tuesday. The company is likely to focus on its long-term prospects and path to profitability.

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