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Can Tilray Stock Rebound After Q2 Results?

Tilray: Will This Marijuana Stock Gain Momentum in 2020?Tilray (NASDAQ: TLRY) is all set to release its Q2 results after the market close today. 2020 has been a miserable year all around for hemp stocks and Tilray has plunged nearly 53% year-to-date. The ongoing volatility in the market and uncertainty surrounding the pandemic continues to rock the cannabis sector. Tilray, which manufactures medical marijuana in Canada and Europe isn’t immune to this tenuous period. The company shows strong growth prospects but it is far from being profitable. But can Tilray stock rebound after Q2 results?

Significant revenue strength through diversification

Can Tilray Stock Rebound After Q2 Results?

One of the biggest strengths of Tilray is its strength in revenue. In its Q1 results in May 2020, the company posted a 126% year-on-year (YoY) growth in revenue, while the sequential increase has been 11%. Tilray has been able to post such an exponential growth on the back of its solid diversification strategy. Cannabis and Hemp with a contribution of 59% and 41%, respectively, are its two major revenue centers for this marijuana stock.

Until a year ago, the cannabis segment contributed 75% of the entire sales. It is only after the acquisition of Manitoba Harvest, a leading hemp and natural food company in 2019, that hemp also became a strong focus area for Tilray.

Analysts expect the hemp stock to report revenue growth in the second quarter too. Tilray’s total cannabis sales are also expected to increase in the second quarter on the back of Cannabis 2.0 product launches, and demand for adult-use cannabis flower sale.

Strategies directed towards cost-reduction

Can Tilray Stock Rebound After Q2 Results?

One major cause of concern for Tilray is its deep losses. Due to the series of growth initiatives, the company’s operating expenses have mounted and thus pressurized its gross margins.

The hemp stock has reported losses for the past four quarters. However, Tilray has begun taking efforts and focussing on cost rationalization. The company in May 2020 announced that it is closing its wholly-owned subsidiary, High Park Gardens, for a few weeks in order to realize annual cost savings of $7.5 million. The cannabis company also stated that it wants to “avoid significant ongoing capital expenditures” and postpositive adjusted EBITDA by the end of 2020.

All eyes on the Q2 results

Besides looking at the revenue and earnings, investors are likely to also focus on the Tilray’s strategies to expand to various global markets through collaborations. We will also look out for the hemp stocks guidance for the upcoming period and its plans to survive (and maybe thrive?) during the global pandemic.

Can Tilray Stock Rebound After Q2 Results?


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