I have seen a lot of things, but what probably tops my rankings is this idea that Tilray (TLRY) will skyrocket because of federal cannabis legislation in the U.S.
People here seem to think that Tilray is the only and largest cannabis player in the world. Well, they simply are not, there are companies like Curaleaf, GTI, and Trulieve that are already larger than Tilray, have more cash, are actually making a profit, and most importantly have all the connections they need to expand even further if cannabis gets legalized.
The upside potential for US cannabis stocks that are trading at multiples that are way lower than Tilray, and are only available OTC, far outpaced anything that Tilray will have.
There is a reason why U.S. cannabis stocks are trading at low multiples, retail investors are not able to invest in these companies on robinhood – a prime platform for a demographic that would consider investing in cannabis stocks.
Tilray on the other hand is already on Nasdaq, are able to get financing from the largest banks in Canada, and therefore fore won’t benefit from U.S. legalization on that front.
It’s such a retarded argument to say that a company that operates in another country with no “major” investments in the U.S. will somehow materially benefit from U.S. legalization.
Tilray has been failing on multiple fronts when compared to competitors whether you want to admit it or not:
- 44% revenue growth vs ~90% growth of U.S. competitors
- only 7% organic growth for what is supposed to be a fast growing industry
- insane exec board compensation that is directly and materially costing their bottom line
- stupid level of stock dilution driven by negative cash flows and inability or unwillingness to raise more debt
- closing down facilities and struggling to integrate their acquisitions
- inflated balance sheets due to inventory pricing driven by appraising inventory at the peak of cannabis prices leading to higher than actual assets -Losing $400MM per year leaving them with negative cash flows
I know a lot of people here are balls deep in Tilray, so wanted to wish you guys good luck. It is not to say that Tilray won’t rise due hype from legalization, but it will not be driven by any underlying revenue or bottom line growth, more so just by multiples expansion.
This post was written by u/MichKOG.
