Tilray Stock Earnings and Forecast: TLRY loses 5% on revenue miss

Tilray stock (TLRY) has started out the week on the wrong foot after posting revenue for the second fiscal quarter that ended in late November. The major Canadian cannabis outfit reported revenue of $144.1 million, which missed Wall Street projections by $13.1 million. This is the second quarter in a row where revenue declined sequentially, and Tilray sales fell more than 7% YoY. TLRY stock is trading down 4.6% at $2.82 about 45 minutes into the session after producing a daily low at $2.64 in the first 10 minutes.

Tilray earnings news: TLRY down 61% from year ago

This is not the earnings news investors were waiting to hear with many hoping this would be the turnaround quarter. Tilray stock once traded above $200 a share (back in 2018), and many thought it would become the corporate face of North American cannabis, but shares of the Ontario-based company have continued to disappoint for the past four years. TLRY stock has lost 61% in the past year.

Before Monday's regular session, Tilray reported adjusted earnings per share (non-GAAP EPS) of $-0.06, which missed Wall Street projections by a penny. This was slightly better than the previous quarter of $-0.08 per share. Tilray CEO Irwin Simon chose to keep it cheery in his remarks however.

"Tilray Brands’ re-positioning as a global diversified portfolio of brands will drive our ability to seize top-line opportunities across geographies and business lines. In the US, this includes investing in, acquiring or building compelling and profitable lifestyle CPG brands across craft beverage-alcohol and wellness consumer products that are cannabis adjacent, resonate powerfully with consumers, and are strongly positioned in key markets," CEO Irwin Simon said in a statement. "In Europe, we believe that we are extremely well-positioned overall in a cannabis market. And, in Canada, we will be patient and strategic in building our competitive positioning amid the price compression and difficult operating conditions that we expect will, inevitably, consolidate the oversupply of licensed producers."

Simon touted $430+ million in cash and securities on the balance sheet, calling it "one of the strongest balance sheets in the industry". He also mentioned that despite the EPS loss Tilray had pushed the gross margin on its cannabis product line from 23% a year ago to 37% in the reported quarter. Despite the revenue drop, alcohol sales rose 56% YoY to $21.4 million. The growth of alchol sales due to acquisitions does not appear to have greatly affected the top and bottom lines for Tilray though.

Tilray's cannabis business grew gross profit from $13.5 million to $18.6 million YoY. Importantly though Tilray cut back its cannabis production YoY, which is why revenue fell despite the surge in alcohol sales. Like usual Tilray continues to move on a number of fronts at the same time with announcements concerning a new partnership with Charlottle's Web in Canada and another initiative to extend its license in Italy. The company announced it will grow its alcohol footprint with the acquisition of Montauk Brewing Company in New York back in November. Management said Tilray retained its title of top cannabis purveyor in Canada with 8% of the market, but its turn toward alcohol like Canadian competitor SNDL (SNDL) seems to make it less of a cannabis play with each passing quarter.

Tilray stock forecast

Despite the negative sentiment surrounding Tilray's most recent quarter, the daily stock chart looks less intimidating. Though TLRY stock dropped well below it early in the session, the cannabis stock has climbed back above the 9-day moving average an hour into the session. This is good news as Tilray stock did not even retest the range low from December 28 at $2.52. Maybe the cannabis sector is not dead yet despite the major sell-off of the past two years. At least some traders see reason for optimism.

The next barrier is the the 21-day moving average at $3.02. The Moving Average Convergence Divergence (MACD) indicator just broke into a bullish pattern on January 5, so it may be poor timing for bearish news. Above the 21-day moving average sits possible resistance levels at $3.20, $4.40 and $4.70.

TLRY daily chart