Ay Caramba! Mexico moves towards marijuana legalizationTilray jumps over 4% on Tuesday thanks to some positive legalization news out of Mexico.
Cannabis stocks were smoking on Tuesday, lifting across the board as Mexico continues to make moves towards full legalization. Mexico is already way ahead of the U.S. in terms of the legalization process – in June, its Supreme Court removed the ban on the personal use and cultivation of marijuana, calling it unconstitutional. Congress is still figuring out a way to completely decriminalize cannabis, especially with its President's well-known anti-marijuana stance, but a top Mexican Senator says that lawmakers will bring up the issue in the next session with the aim of establishing a regulated marujuana market in the country.
Excitement over the potential to expand into a brand new legal market sent Canada’s Tilray up 4.27% to $13.69. That’s still down nearly 80% from its February peak of $67 though, when the firm agreed a distribution deal with the U.K.’s Grow Pharma.
Tilray places another bet on U.S. legalizationCannabis giant Tilray gambles on U.S. legalization, acquiring a majority stake in American cannabis retailer Medmen.
Prices of Tilray popped 5% in extended trading on Tuesday after the cannabis company got a foothold in the U.S. marijuana market in the hope that it will soon become legal at a federal level. The deal saw Tilray and other investors buy 75% of Medmen’s outstanding secured convertible notes for $168.5 million, which, once converted, will give the company a significant stake in the U.S. cannabis company. Tilray is fresh out of a merger with Aphria, making the combined company the biggest marijuana seller by revenue in the world. Chief Executive Irwin Simon said in a statement:
Medmen operates 25 retail stores so far, and plans to open five more by the end of the year.
Tilray takes a trip after mixed earningsTilray is high on life, with stock prices lifting 25% on Wednesday after its first earnings report since its merger with Aphria sees impressive numbers despite COVID-related obstacles.
Shares of Canadian pharmaceutical and cannabis company Tilray went on a celebratory trip and ended Wednesday up over 25% following its first quarterly report after its mega-merger with Aphria in May. The pair joined forces last month in a reverse merger to make the world’s largest cannabis producer by sales. The new cannabis giant’s fiscal fourth quarter just missed sales estimates but came in above target on earnings, reporting earnings per share of $0.18 compared to a loss of $0.39 per share last year, and revenue increased 25% year-over-year to $142.2 million compared to estimates of $142.93.
The report may not have hit the nail on the head, but it sure got the attention of the online army. Tilray stock was the third most mentioned stock on WallStreetBets in the last 24 hours and the top trending stock on Stocktwits as retail traders cheered on the newly merged company.
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The euphoria didn’t last though, and Tilray sank back 4.34% on Thursday.
Puff the magic dragonTilray is on a high, puffing up 11% on the back of news that Amazon will be backing efforts to legalize marijuana.
Tilray, along with other big cannabis companies, is on the up after Amazon announced its support for federal cannabis legalization efforts, and called for other companies to do the same. The e-commerce giant said in a blog post on Wednesday that it supports proposed legislation to legalize marijuana at a federal level, with its public policy team actively supporting The Marijuana Opportunity Reinvestment and Expungement Act of 2021 (MORE Act). This is great news for cannabis stocks, because even though a lot of states have legalized the stuff, most employers won't work with the industry because of its bad rep with the federal government – so this move indicates a growing willingness within corporate America to get behind the issue.
The news certainly sent pot stocks puffing up. Sundial Growers rose 13% on the news, Aurora was up almost 8%, and Canopy was up just under 5%. Investors are sure that cannabis reform will make it easier for weed companies to do business, by boosting demand from those who dabble recreationally. After Tilray’s merger with Aphria, the pair have become a power couple in the sector and represent the world's largest cannabis outfit – so it stands to reason that a lot of the benefit of legalization will land on them. It’s also got the stock a whole lotta love on social media (and we all know the benefits that can bring, ahem, Elon) – Tilray was the seventh most mentioned stock on WallStreetBets.
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A match made in heavenTilray and Aphria close their merger, but the latest results take the edge off their high.
Last week Monday, Aphria and Tilray announced the official closing of the merger between the two, creating the world’s biggest marujuana company (as measured by revenue.) That’s dope.
The new combined company, which will operate under the name Tilray, is expected to generate pre-tax cost-saving synergies of $81 million within 18 months. Analysts are keen, and the new firm has already won an upgrade from Jeffries and a 14% price hike. The investment firm double upgraded Tilray to buy from underperform, raising its price target from $4.77 to a whopping $23, with analyst Owen Bennet calling the pair a "perfect match." Bennet expects combined sales to grow 33% to $1.7 billion in 2024, highlighting the company’s strong sales and profit profile compared to rivals such as Canopy Growth.
It’s not all rainbows and unicorns though. Tilray’s latest earnings cast a shadow over the gains – anticipation for the release sent prices down over 7% on Monday, and the report missed expectations.
Tilray reported a quarterly loss of $0.19 per share compared to a loss of $0.49 a year ago on expectations of $0.10 loss per share. Revenue came in at $48.02 million for Q1 of this year compared to $52.1 the same period last year, missing estimates by 22.38%. The company has only topped estimates once in the last four quarters, as it deals with the effects of COVID-19, and the market is still waiting for clearer signs that the company can capture a meaningful portion of the cannabis market.