Tilray Inc (NASDAQ: TLRY) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company reported its financial results for the second quarter yesterday. While quarterly revenue grew 95%+ and 6 month revenue grew 75%+, the real source of excitement seems to have to do with the company’s work in preparation for the launch of the Canadian recreational cannabis market. Today, we’ll talk about:
- Why TLRY is leading the charge in Canada;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
TLRY Leads The Charge In Canadian Preparations
Early this year, it was announced that Canada would become the second country in the world to legalize cannabis for recreational use. Since then, Tilray and other players in the Canadian cannabis game have been working to prepare for the launch of the new industry. Nonetheless, TLRY seems to be leading the charge.
In the financial results press release, the company announced that it has signed supply agreements that will bring its products to 7 provinces and territories in Canada. These provinces and territories include Britis Columbia, Manitoba, Nova Scotia, Ontario, Quebec, the Yukon territory and the Northwest territories. After digging into the populations of these provinces and territories, I am impressed. The populations in these regions represent well over 70% of the population in Canada. This means that the company’s products will be in front of more than 70% of its target audience in the region.
So far, there has been no cannabis grower or supplier that has had such far reach in Canada. At the moment, Cronos is in second place with its products coming soon to Nova Scotia, Prince Edward Island, British Columbia and Ontario; representing more than 50% of Canada’s population. Behind Cronos, we find Canopy Growth which has worked its way into 3 supply agreements covering Nova Scotia, Ontario, and Prince Edward Island; representing just under 50% of the Canadian population.
Why Is This Important
With the Canadian recreational cannabis market opening up soon, there’s going to be a ton of revenue up for grabs. At the moment, modest estimates suggest that the Canadian retail cannabis sector will generate between $4 billion and $6 billion within the first year. The company that becomes the leader with regard to brand recognition will likely take the lion’s share of this market. At the moment, TLRY seems to be that company as it has minted more supply agreements than any other cannabis supplier in the region.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. Recent news surrounding Tilray has been overwhelmingly positive. After all, the company reported earnings showing impressive growth to say the least. Also, with a strong hold on the newly-forming Canadian recreational cannabis industry, the company may prove to be the clear winner as the market opens its doors to the company’s products. So, it comes as no surprise that excited investors are sending the stock through the roof. At the moment (7:38), TLRY is trading at $62.32 per share after a gain of $10.82 per share or 21.01% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on TLRY. In particular, we’re interested in following the story surrounding the launch of the recreational cannabis industry in Canada and the company’s revenue following the launch. We’re also watching the rest of the company’s global operations. After adding 3 new countries and 1 new continent, the company’s products are now available in 11 countries across 5 continents. So, growth is definitely something worth watching. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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