Tilray shares tumbled in Wednesday’s trading after the Canadian cannabis company missed the Wall Street consensus for both earnings and revenue in Q3 as selling prices in the legalised marijuana market cratered.
Tilray has been a popular stock for speculative investors during the last 18 months, but it has struggled to turn a profit and that was true again for the three month period to 30th September as Non-GAAP EPS came in at -$0.50 — 20 cents wider than forecast.
Group revenues painted a better picture for the period after soaring 379% to $48.17m, but that was still shy of the pre-report estimates by $1.4m.
Tilray’s bottom line was hit by a combination of declining selling prices, which halved to $3.25 per gram and a four-fold hike in spending costs ($17m).
However, there was strong demand for products in Q3 as kg equivalents sold grew at a startling pace (+573%) to 10,848.
Tilray’s large inventory levels follow on from its decision to scale up production in the wake of Canada’s decision to legalise recreational marijuana in late 2018, but it said goods in stock would ease lower heading into 2020.
CEO Brandan Kennedy spoke of “solid revenue growth and sequential gross margin expansion” in a conference call late on Tuesday and its expectations for marked growth in Q4 and the 2020 calendar year.
Kennedy believes its strategic initiatives are coming to fruition with expansion across Europe, an updated brand portfolio and strategic partnerships for product launches, all having a positive impact on the business.
He concluded: “Beyond that, our strong global infrastructure and supply chain are a critical competitive advantage and our team is focused on maximizing the substantial opportunity we have to deliver long-term, sustainable value to our shareholders.”
Tilray stock rallied after the report was published before retreating (-3.1%) in Wednesday’s premarket for a potential opening price of $20.91 per share. The latest move means TLRY is now in the red to the tune of 72% for the year.
Homebuilder D.R. Horton (NYSE:DHI) and food company Tyson Foods (NYSE:TSN) fared better after delivering strong quarterly reports in midweek.
D.R. Horton’s shares climbed 3.1% to $54.27 after $1.35 earnings came in 10 cents ahead of estimates while Tyson Foods shook off earnings and revenue misses with very positive guidance for FY2020 — a move that helped stock rise 7.4% to $88.88.
Disney (NYSE:DIS) also continues on an upward curve after it followed an excellent quarterly showing with a seamless Disney+ launch on Tuesday. The media giant’s stock closed 1.2% higher at $138.55.