The stock has grown 366% since its IPO last year, thanks to the legalization of medical marijuana in various parts of the world, as well as a more welcoming attitude by young investors. However, TLRY shares have fallen 64% since its 52-week peak in mid-September as investors remained concerned about the cut-throat competition in the market, besides Tilray’s ability to achieve profitability.
Read: Investing in pot stocks 101: Here’s what you should know
To fend off competition, the Nanaimo, Canada-based company is forced to put more capital investments into production capacity expansion, but this is denting its bottom-line in the short term. However, this should not worry investors as the marijuana industry is a budding one with abundant potential outside the US. With a good head-start, Tilray is already well positioned to wrestle away some of the market to itself.
What apparently irks investors the most is Tilray’s inability to produce any profits, even as peer companies have started making money. Add that to the fact that Tilray has been underperforming other pot stocks since the start of the year. Q4 earnings will prove crucial in establishing the worth of the company.
Tilray has recently been on a partnership spree to diversify its portfolio as well as to establish effective distribution channels. These include agreements with beer giant Anheuser-Busch InBev (BUD), to research on a marijuana-based beverage. Once successfully made, this product could become the growth driver for both companies.
Read: Tilray is on a consolidation spree
During the post-earnings conference call, look out for management comments on how and when it expects to finally achieve profitability.
In Q3
Tilray, Inc. (TLRY) reported a net loss for the third quarter, hurt by higher operating costs. Analysts had forecast a wider loss. Though revenues surged 86%, the company’s stock dropped in the extended trading session Tuesday, following the announcement.
Also read: Aurora Cannabis reports a loss of C$238 million for Q2
(UPDATE: An earlier version of the story had given the earnings date as February 12, even though there was no official confirmation on the same)