Play a Game of ‘Pot Monopoly’ with Tilray Stock


It’s fair to say that there’s been a whole lot going on at Tilray (NASDAQ:TLRY) lately. The price action of TLRY stock has been wild, mostly due to some recent news developments.

Tilray (TLRY) logo on a web browser.
Source: Jarretera /

Cannabis cultivators had a rough time in 2020 as they had to deal with the economic impact of the novel coronavirus pandemic, just like other types of companies did.

Today, Tilray and other cannabis companies are working diligently to put their fiscal houses in order. Some are doing better than others, but Tilray’s recently reported data seems to suggest that the company is in good fiscal health.

That’s encouraging, but there’s another event that’s generating a whole lot of attention. Indeed, it could be a game changer that impacts the global cannabis market for years or even decades to come.

A Closer Look at TLRY Stock

I alluded to the wild price action in TLRY stock, and that’s not an exaggeration. As evidence of this, note that the stock’s five-year monthly beta is 2.83.

This means that the stock has historically tended to move nearly three times as fast as the overall stock market.

If you require more evidence, observe that Tilray shares have a very wide 52-week range of $2.43 to $67. Much of that movement occurred within a span of a couple of months.

It was quite stunning to witness TLRY stock start off 2020 at around $9, then rocket up to $67 on Feb. 10, only to fall back to $24.36 by Feb. 26.

But then, that’s how it goes when you’re trading cannabis stocks. Volatility is to be expected in a market that’s still emerging and remains hotly debated among politicians and the populace.

Focused and Efficient

While folks are buzzing about the upcoming business combination, investors shouldn’t ignore Tilray’s largely positive fiscal data.

On Feb. 17, Tilray released its fourth-quarter and full-year 2020 fiscal results. Even with the economic impact of the Covid-19 pandemic, Tilray generally had a successful quarter and year.

Here are the fourth-quarter highlights:

  • Total revenues increased by 20.5% year-over-year (YoY) and 10% quarter-over-quarter (QoQ)
  • Cannabis segment revenues rose 46% YoY and 31% QoQ
  • On a QoQ basis, International Medical sales increased by 44%; Adult-Use sales by 27%; and Canada Medical sales by 24%.

And, here are the full-year 2020 bullet points:

  • Total revenue increased 26% YoY (i.e., compared to 2019)
  • The Cannabis segment grew 25%, while the Hemp segment grew 28%
  • The average net selling price per gram of cannabis increased by 51%
  • 2020’s proportion of International Medical sales increased to 23% versus 12% in 2019

Tilray CEO Brendan Kennedy also reported that his company reduced its costs by $57 million on an annualized basis compared to 2019’s fourth quarter.

“As a result, we now operate with a more focused, efficient and competitive cost structure,” Kennedy added.

A Merger of Consequence

It should also be observed, as InvestorPlace contributor Mark R. Hake pointed out, that Tilray was finally able to achieve EBITDA (earnings before interest, taxes, depreciation, and amortization) profitability during the fourth quarter.

It’s great to see Tilray keeping its costs down and shifting towards a broadly positive financial profile.

What could possibly make things better for Tilray and its stakeholders? The answer is: a business combination that will cause major ripple effects across the global cannabis market.

The news of the merger with Canadian cannabis rival Aphria (NASDAQ:APHA) is so consequential that the two companies felt the need to create a separate website to address it.

Together, Tilray and Aphria are “Creating the largest global cannabis company by revenue.”

How big will it be? Let’s just say that within two years of the completion of the business combination, the new company is expected to generate approximately 100 million CAD ($78 million) worth of annual pre-tax annual cost synergies.

Could this combined business monopolize the Canadian or even the global cannabis cultivation industry? Only time will tell, but at least we can anticipate massive-scale revenues and, possibly, a run-up in the share price.

The Bottom Line

So, now you’ve got the lowdown on Tilray’s brightening fiscal picture and the merger that’s set to make history in the cannabis industry.

All of this makes TLRY stock, currently off of its peak price, more attractive than it’s been in a long time.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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