Tilray: Top Hemp Stock?
The marijuana sector is well poised for a resurgence in the second half of 2020 after burning massive investor wealth over the last 15 months. Cannabis and hemp stocks such as Aurora Cannabis (NYSE ACB) seem to no be on the road to recovery after posting positive financial results.
Here, we look at another pot stock that is one of the top players in the hemp industry and whether it can end 2020 on a high.
Tilray: Extreme Highs and Lows
Tilray (NASDAQ: TLRY) went public back in June 2018 at a price of $17 per share. A year later they announced 200% YoY profits in Q1 2019. The stock then crested at an astounding record high of $142.84 in November 2018 before crashing to its all-time low of $2.43 in March 2020. The stock has since recovered to its current price of over $10 but is still down approximately 40% for the year.
Tilray is one of the leading hemp stocks in North America where hemp production is estimated to grow at a feverish pace in the upcoming decade. According to a publication by Markets and Markets, the growth rate of industrial hemp is pegged at an annual rate of 34% between 2020 and 2025. In simpler terms, it claims the hemp market could climb up to $26.6 billion in the next five years.
In the first quarter of 2020, Tilray reported revenue of $52.1 million, up 126% year-over-year. This was the company’s highest quarterly revenue and it experienced sequential growth across core businesses including hemp.
Tilray’s hemp products are now available in over 17,000 retailers and in 20 countries all around the world. Hemp sales in Q1 accounted for 41% of total revenue, up from 36% in 2019.
Tilray has managed to increase hemp sales in the last year due to its acquisition of Manitoba Harvest. Tilray gained access to Manitoba’s network of 16,000 retail stores across the North American continent.
Will Hemp Products Hurt Profit Margins?
Tilray’s gross margin in Q1 fell to 20.1% compared to its margin of 23.4% in the prior-year period. As hemp-derived product margins continue to reduce, the economic impact will continue to weigh heavily on Tilray’s bottom-line in the upcoming quarters. How will this impact other hemp stocks like GW Pharmaceuticals or Hemp, Inc.?
We can see why cannabis stock investors are attracted to hemp stocks. The expanding addressable market is a key driver of sales which will boost the company’s top-line. However, marijuana and hemp stocks including Tilray are grappling with lower profit margins and are burning cash at a fast rate.
Tilray: Top Hemp Stock?
About Cannin: Your Marijuana Investment Experts
Cannin is your trusted resource for information about marijuana and hemp stock investment opportunities. Our global team of experts evaluates all emerging marijuana and hemp stock investing opportunities. We aggregate hundreds of hours of research and provide tips on the best marijuana and hemp stock investments for 2020. We provide the latest marijuana investment and hemp investment news and analysis.
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