Tilray: The constellation brands of cannabis Good Read!
https://gilaherald.com/ask-natalie-tilray-the-constellation-brands-of-cannabis/
One of the most exciting developments is that one company, in particular, has been on an M&A buying spree and could post up to a 40-64% increase in year-over-year adjusted EBITDA growth as soon as next week.
Canopy Growth has a CEO who came from Constellation Brands. However, it is Tilray that is becoming the diversified spirits brand of the cannabis space. Tilray acquired Sweetwater Brewing (and their popular 420 craft beer) in December of 2020. On Nov. 10, 2022, they added Montauk Brewing to their spirits brands, which also include Breckenridge Distillery, Green Flash Brewing, and Alpine Beer. Most of the new acquisitions by Tilray have been in the craft-beverage space.
U.S. cannabis legal status by state. Source: DISA.com. M&A will increase revenue. Of course, it’s also important to purchase companies with their own expansion potential and fiscal husbandry. According to Carl Merton (CFO), Tilray’s craft and wellness brands are “strong, high-margin businesses.” During the earnings call conference on Oct. 12, 2022, Tilray CEO Irwin Simon reported that “SweetWater is available in 42 states across the U.S., including most recently in California, which is the number one beer market in the U.S.” The West Coast expansion for SweetWater is still in the early stages.
Tilray’s next earnings report will be on Jan. 9, 2023, before the market opens. The last quarter saw a 9% decline in revenue year over year. There were strikes, cyberattacks, and price compression to deal with, which Tilray anticipates making up in the quarterly results that will be reported on Monday. The company doesn’t provide revenue guidance other than that. However, with the acquisitions and resolution of the last quarter’s challenges, there could be solid growth, at least in the craft beverage vertical.
Tilray has the potential to be a bright star in the industry. However, the prospects for share price growth in the industry at large remain highly correlated with the legalization (or perceived) of countries. So, a great quarter for Tilray could be tempered by the tepid expectations for the industry. We’re unlikely to see more Shoot the Moon phenomena until Germany or the U.S. decriminalizes, though a bounce off of the current depressed prices could still be notable. It’s worth it to keep an eye on Germany since Tilray already has a 20% market share there in “flower, extracts, and dronabinol products.”
Cheers,
V