The peak of earnings season is behind us, but there are still some significant companies trickling in, and Wednesday was a big day for the cannabis industry. Both Tilray and Aurora reported earnings, with mixed results.
Tilray (TLRY), the Canadian pharmaceutical company, had some good news to start. Year-over-year revenue nearly tripled from Q1 2018, due in no small part to the nationwide legalization of cannabis in Canada last year. Sales were roughly evenly divided between adult-use, medical marijuana, and edible/potable cannabis. That is significant, because the strongest cannabis companies will be able to compete in all three of those major sectors.
Overall, Tilray posted stronger than expected sales, and started the day strong despite reports from CEO Brendan Kennedy that they were struggling to find high quality cannabis. Even so, he explained, they were looking to form more and more partnerships with companies who wanted an ally in the cannabis field.
“We’ve been inundated with contacts from Fortune 500 companies who are interested in exploring partnerships with Tilray,” Kennedy told investors. “And it’s a range of companies from a broad variety of industries. And generally the deals that have been done with other companies, we generally talk to those people at some point in their process.”
— Brendan Kennedy (@BrendanTKennedy) May 14, 2019
Aurora, on the other hand, did not have such good news. They also experienced a huge boost from Canadian legalization, with sales increasing almost fourfold. But losses were more severe than expected. They posted about C$160 million in losses for the quarter, which equates to a loss per share of roughly 16 cents. Most analysts were projecting a loss per share closer to five cents.
Despite that bad news, CEO Terry Booth remained bullish on the company’s future:
“I’m exceptionally proud of our company and team as Aurora continues to deliver on our domestic and international growth strategy. We achieved solid revenue growth and strong operating results in a quarter proven challenging across the industry. We are laser focused on building a long-term sustainable business.”
Interestingly, the market has responded in reverse kind to the two stocks. Tilray, who had the much better day, is down about 2.42 percent, while Aurora (ACB), who posted significant losses, is up 4.7 percent. Other cannabis companies like Canopy Growth Corp and Cronos Group were also up on the day.
Investor confidence doesn’t seem to be there with Tilray right now, but their numbers were good. That could change at a moment’s notice. Meanwhile, folks believe in Aurora. Maybe Aurora’s larger market cap (roughly $11.3 billion compared with Tilray’s $4.6 billion) buys it a longer leash. Whatever the case, these are significant stocks to continue monitoring if you’re interested in the growth of the cannabis sector.