Cannabis company Tilray Brands (NASDAQ:TLRY) stock fell 15% overnight after management admitted it no longer expects to have a positive free cash flow in fiscal 2024.
The bad news came in an earnings release that tried hard to focus on good news about growth and gross profits.
Tilray lost 12 cents/share on $188 million in revenue for the three months ending in February. Analysts had expected a loss of 5 cents/share and $198 million of revenue.
Tilray stock opened this morning at $2.11 per share, a market capitalization of $1.70 billion.
More Beer!
While waiting for cannabis to be legalized, Tilray has expanded into beer.
It now owns several craft beer labels, including Sweetwater, Shock Top, and Widmer Brothers. Eight of the brands were bought last year from Anheuser-Busch InBev (NYSE:BUD). That revenue rose 156% from a year ago to $54.7 million, with gross profits up 89% to $18.9 million. Tilray is now the fifth-largest craft brewer in the U.S. with a 4.5% share of the market.
Cannabis revenue, on the other hand, grew just 33% to $63.4 million despite two acquisitions. Gross profit was $21 million, up from a loss of almost $33 million a year ago.
It was the guidance that hit the stock. Tilray blamed delays in getting cash from asset sales for its failure on cash flow. The February quarter was the third of its fiscal year.
In addition to the guidance, analysts are worried about debt levels rising and operating losses expanding on its acquisitions. Shares have rebounded off a March low of $1.60/share but are flat over the last year, while the S&P average has been soaring.
There remain Tilray bulls, like fellow InvestorPlace contributor Faisal Humayan. He sees gradual legalization leading to growing cash flow.
TLRY Stock: What Happens Next?
Marijuana stocks were hot in the last decade as investors had to scrounge for good stories. Tilray has gotten through the slump on beer, and that may be a better business.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
