Tilray Inc.🌿 Pre-Earnings News Sentiment Spotlight 10/6/21
$TLRY's news sentiment exhales a sigh of relief despite declines in share price. Will management's ambitious revenue outlook + growing support for U.S. cannabis legalization = breakout towards $20?
Hi everyone — welcome to this week’s bonus letter. Today we’ll be taking a look at conversation surrounding Tilray Inc. ($TLRY) to see if the cannabis company’s news sentiment over the past few months may provide any insight into it’s upcoming earnings report this week. As always, the best way to support this newsletter is by showing some love with a like, comment, or sharing with a friend. If you enjoy this report and what to keep up-to-date on all of our news sentiment research, make sure to subscribe below 😊🤝
This report was compiled using article sources detected and analyzed via our v1 News Analyzer Website. Check out more details about how to get started using the analyzer yourself at the bottom of this page. Now, here’s a breakdown of this 7-minute report so you can skip around and prioritize:
Intro to Tilray Inc. ($TLRY)🌿 [4 min read]
$TLRY News Events and Headlines🗞️ [2 min read]
$TLRY News Sentiment vs. Price⚖️ [2 min read]
$TLRY Hype-or-Snipe Sentiment Rating🎯 [1 min read]
1. Intro to Tilray Inc. ($TLRY) 🌿
Tilray Inc. is a Canadian cannabis and pharmaceutical company, known for being one of the most polarizing and volatile stocks on the market in recent memory. When it became the first marijuana stock to go public on a major U.S. exchange back in 2018, national legalization was just setting up to hit Canada. $TLRY stock quickly ballooned 5x from $30 to $150 within its first 6 months of public trading — amidst the general excitement about the potential of the recreational and medical marijuana industries — and investors were ecstatic.
But much like Avatar, The Last Airbender: as quickly as $TLRY rose to stardom, it vanished. By the end of 2019, Tilray had fallen below $18 per share as investors realized there was nothing of substance to prop up the awe-inspiring price heights. Then, as the COVID-19 pandemic began in 2020 and investors drew money out of everything with considerable volatility (ie. marijuana stocks), $TLRY became virtually relegated, trading all the way below $3 per share (!) by April and remaining below $10 throughout the year. The company had 10x'd its revenues throughout the 2-year span, but was still hemorrhaging money with exponentially increasing expenses. Investors who were once ecstatic about the stock’s potential were now in the depths of despair — then something peculiar happened.
Most of you reading this will be old enough to remember the meme-stock trading frenzy that took place at the beginning of 2021. For you youngsters who might not, here’s the synopsis: in January retail investors, who were flush with stimulus cash, angry at institutions, and inspired by a sense of collective unity in online communities like Discord and Reddit, began buying up weary stocks with high short-interest en masse. It started with Gamestop ($GME), a stock with too much institutional short interest from the likes of Melvin Capital; retail investors realized that if they banded together they could squeeze the price and force the big boys to cover their puts, further driving the price up and accomplishing two goals: making small-time investors rich overnight, and sending a message to Wall St. about the skewed “fairness” of the markets towards institutions.
The Gamestop phenomenon (which has since been dubbed “the Big Squeeze”) quickly spread to other worn-down, retail-centric stocks like memes on Twitter, namely AMC Entertainment ($AMC), Blackberry Ltd ($BB), and of course: Tilray Inc. ($TLRY). Tilray was the perfect surrogate for this type of meme-related retail investor squeeze: a stock with ultra-high short interest in an industry with tantalizing (though uncertain) long-term potential. On top of all this, at the time Tilray was finalizing negotiations to purchase its rival Aphria Inc. (formerly $APHA), which would make it one of the world’s largest legal cannabis producers by sales. In a perfect storm of events, $TLRY stock burgeoned from $9 per share at the beginning of January all the way back up to $63 in early February. Investors — though slightly less long-term focused this time around — were yet again ecstatic.
However, from then until now it’s been the same old story. The Aphria Inc. merger was finalized with lackluster reaction from the market, the meme-stock craze depleted, and $TLRY’s stock fizzled from its February highs all the way back down to its current price of $10.64 per share. Over the span, it’s garnered the reputation of being one of the more volatile stocks in existence, and for good reason, of course. Most long-term investors who’ve purchased $TLRY have done so with the expectation that its value will double or triple again once marijuana is inevitably legalized federally in the United States. While it remains one of the world’s biggest cannabis producers, this legalization remains unseen, and the company continues to spin its tires, burning money in the meantime. Yet despite all its trading turmoil, $TLRY stock still sits 32% above its price from this time last year, even as the overall industry has posted a 17% decline.
The future for Tilray? The company is expected to release earnings pre-market tomorrow, Thursday 10/7/21 — the remainder of this report will focus on $TLRY news coverage sentiment over the past 3 months to provide insight into how the company’s stock will perform in the weeks to come.
2. News Events & Headlines 🗞️
Over the past three months, $TLRY has appeared in 125 unique financial headlines published by 40+ accredited sources — which is more often than any other ticker in its peer group besides Sundial Growers ($SNDL, 157 headlines). Despite $TLRY’s abysmal stock market performance over the period, headlines have actually trended upwards in terms of their sentiment expressed about the company. Of the 125 articles written about Tilray, roughly 45% expressed significant positive sentiment about the company, while roughly 11% expressed significant negative sentiment; the remainder were relatively neutral or wishy-washy in their mentions of $TLRY.
The majority of articles written about Tilray recently have centered around two main factors: the company’s semi-controversial management, and the stock’s incredible volatility. In terms of management, everyone seems to have a different opinion: while some analysts have lauded Tilray executives for setting ambitious goals for the future trajectory of the company (ie. their recent shareholder letter which announced plans to grow from their current yearly revenue of $500M to an asinine $4B in revenue by 2024), others have accused Tilray execs of misleading shareholders with their overzealous projections and a recent proposal to increase the overall number of authorized shares. Analysts do seem to agree that $4B in revenue will be a tall task, but disagree on the feasibility of achieving it.
One thing is clear: Tilray will need to more than triple FY24 revenue estimates to just reach these $4B targets, and with increased M&A activity and dwindling organic growth currently, the going may well get tougher before it gets easier. We will look to their upcoming earnings as any indication of whether or not the company is on the right path. But first, here’s the shortlist of significant news events leading up to this week’s earnings call:
May 5th: Tilray finalizes its “business combination” with Aphria, making it Canada’s largest cannabis producer
June 8th: Tilray announces the launch of new medical cannabis brand Symbios
July 29th: Tilray shareholders vote in overwhelming support of increasing authorized shares at Special Meeting
August 26th CEO Irwin D. Simon sends shareholder letter mapping out $4B revenue plan by 2024
September 30th: Bill to federally legalize marijuana in the U.S. is approved by key house committee
Top $TLRY Headlines by Sentiment 📰
To match $TLRY’s volatility in share price, Tilray’s news sentiment has been highly polarized in recent months, with the majority of its articles being either highly bullish or highly bearish. Here are the most bullish and bearish $TLRY articles of the past 30 days:
Most Bullish $TLRY Articles:
“Tilray Is Poised to Move 75% Higher With Huge Sales Growth” | InvestorPlace (87% bullish)
“Tilray Stock Could Shoot 40% Higher, Says Wall Street” | TheStreet (82% bullish)
“Tilray Chairman and CEO, Irwin D. Simon, Sends Shareholder Letter Mapping out $4B Revenue Plan” | Business Wire (78% bullish)
Most Bearish $TLRY Articles:
“Tilray Stock Doesn’t Have a Good Path Forward as Revenue Flags” | InvestorPlace (91% bearish)
“Tilray: 250 Million Reasons Shareholders Aren't Happy” | SeekingAlpha (88% bearish)
“Tilray Stock Investors Shouldn’t Count on Help From $4 Billion Plan” | InvestorPlace (85% bearish)
3. News Sentiment vs. Price ⚖️
Over the past 3 months, $TLRY stock price vs. news sentiment has shown a -0.20 correlation (which is considerably negative). In terms of sentiment polarity — which is a measure of the amount of optimism and pessimism expressed about $TLRY in news coverage — Tilray has scored roughly 40% polarity over the past 3 months, which is the highest grade out of its entire peer group. Further, this polarity has shown a correlation vs. share price volatility of roughly 0.26, signaling that the more torn analysts are in their opinions of the stock, the more volatile its share price has been. $TLRY’s news sentiment vs. price is visualized on our v1 News Analyzer, shown below:
The negative correlation between news optimism and share price means that analyst opinions of the stock have improved recently despite the stock’s decline. This may indicate that the stock is approaching “undervalued” territory. The increase in optimism may be driven by the ambitious price targets of Tilray executives, as well as an increasingly positive outlook for federal marijuana legalization in the United States. Looking into the company’s current price-to-book ratio — which compares its current stock price versus it’s current financial valuation per share — $TLRY currently sits at a P/B of roughly 1.14, which is well below its historical median P/B of 2.72. This seems to back up the “undervaluation” signal provided by the stock’s negative price-vs.-sentiment correlation, though it should be noted that $TLRY is still trading near 10x its previously released revenues per share from its cannabis sales.
4. Tilray Hype-or-Snipe Rating 🎯
Given that $TLRY’s news sentiment has trended upwards recently despite decreasing stock prices, and accounting for its relatively low P/B ratio, our algorithms give Tilray a current Hype-or-Snipe Rating of +0.17. On a scale from -1.00 (being extremely overhyped price) and +1.00 (being extremely underhyped price), this means that $TLRY stock is relatively underhyped with respect to its recent news sentiment, and that its share price has the potential for a considerable increase following its upcoming earnings release (read our first $NVDA sentiment spotlight for a full description of our Hype-or-Snipe Rating).
$TLRY’s price movement, of course, is highly contingent upon whether or not the company can report Q1 earnings anywhere above the consensus analyst estimate of $2.88 per share (with revenue estimates at $960 million). With management painting the picture for $4B in revenues by 2024 and significant activity in mergers and acquisitions to grow its Canadian market share over the past year, meeting these expectations seems reasonable — perhaps mandatory. $TLRY stock also shows decent resistance around $8 per share, and with U.S. federal legalization efforts in the crosshairs, the upside for the stock in the near future appears to outweigh the downside. Long-term, Tilray has laid the groundwork to remain a mainstay of both the global and American cannabis markets. However, $TLRY does remain one of the most volatile players in its peer group, so one would not be remiss to hold off on taking a position in $TLRY until its revenue trajectory is a bit more proven. Tilray Inc. is scheduled to release its Q1 earnings report pre-market Thursday morning (10/7/21). If you can stomach the volatility, it may be worth playing the swing. That’s it for today’s spotlight report, let us know what you think below, and thanks for reading! 🙏
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