Tilray Stock: What to Expect Ahead of Q4 Earnings

Earnings day for Canadian cannabis company Tilray  (TLRY) – Get Tilray Brands Inc. Report is just around the corner. On July 28, the company will release fourth-quarter (Q4) results before the opening bell.

Tilray shares are down sharply this year. So far in 2022, the stock has lost more than 50%. But it still remains one of the few profitable cannabis companies on the market.

Even with modest growth estimates, in Q4, the company needs to continue to demonstrate that it is capable of maintaining its leading market share in Canada and the European medicinal market.

Should investors get excited about Tilray’s Q4 earnings?

Figure 1: Tilray Stock: What to Expect Ahead of Q4 Earnings

Tilray

(Read more from the Wall Street Memes: GameStop Stock: Short Sellers Take a Beating in July)

Poised for Another Good Quarter?

Despite Tilray’s miserable stock performance so far this year, it could rally if the company manages to report results similar to last quarter’s.

In the third quarter, the company beat loss-per-share estimates by 8 cents, reporting earnings per share of 4 cents. It also managed to grow revenue by 23% compared to the same period last year.

Despite losing some of its market share in the Canadian cannabis market, Tilray managed to remain the No. 1 marijuana company in Canada and Germany, as well as in the European medical cannabis market.

According to CEO Irwin D. Simon, the third quarter showed the company in line with its goal of reaching $4 billion in revenue by the end of fiscal 2024.

But in Q4, Tilray is expected to report a loss per share of 8 cents. And as for revenue, Tilray is expected to report only 7% year-over-year growth, to $152.06 million.

What’s worse, ongoing macro and consumer headwinds may cause Tilray to lose more of its share of the Canadian cannabis market.

That’s one of the main reasons why Roth Capital analyst Scott Fortune has taken a more neutral stance on Tilray stock and reduced his price target from $8 to $4.

The HEXO Deal

Tilray shares have been affected by news regarding the company’s alliance with HEXO  (HEXO) – Get HEXO Corp. Report. Tilray purchased HEXO’s secured convertible note in mid-July. The news sent Tilray shares up as much as 22%.

Tilray’s investment in HEXO will help add to the commercialization of its products, improve its operational efficiency, and maintain its leadership position. According to the company, the transaction is expected to be immediately positive in revenue, earnings before interest, taxes, depreciation, and amortization (EBITDA), and cash flow for Tilray Brands.

However, we’ll have to wait for a later quarter before the impacts of the deal are reflected in Tilray’s financial performance.

Tilray’s Earnings Day Will Be a Busy One

Macro jitters could be a stumbling block on Tilray’s earnings day. Thursday is also the day on which the Bureau of Economic Analysis (BEA) releases its advance estimate of the U.S.’s second-quarter gross domestic product (GDP).

The markets are nervously awaiting the BEA’s announcement, which will be a determining factor in the debate about whether a recession is on the way.

Therefore, there is a possibility that, depending on the way which the BEA’s data is interpreted by the markets, it may cause a general sell-off in stocks. At least in the short term, this may dampen any kind of excitement about Tilray’s earnings results. 

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)

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