The Impact of Tilray's Financial Results on Marijuana Stocks

Tilray's pain is everyone's pain

How bad was Tilray's news, and was it bad enough to justify the reaction to other marijuana stocks? It depends on how you look at it.

On the one hand, Tilray put up some pretty decent growth numbers -- 30% total sales growth, 33% growth in marijuana sales, in particular, and 165% growth in alcohol sales. On the other hand, marijuana investors would probably rather have seen Tilray do a bit better on the marijuana front.

It's also worth pointing out that even much of Tilray's marijuana sales growth came not organically but from the company's acquisition of Hexo. Thus, growth in Tilray's marijuana business doesn't necessarily imply that the marijuana industry, as a whole, is growing. And the contrary may be more accurate.

Should you buy or sell marijuana stocks?

What does this mean for Tilray's competitors? Consider that the company is one of the biggest marijuana stocks on the market today, with roughly twice the market cap of Canopy or Cronos and several times the size of Aurora Cannabis. Only a couple of OTC-listed cannabis stocks are bigger. If Tilray can't earn a profit in this business despite gobbling up competitors and cutting costs, what hope do smaller companies like Aurora Cannabis, Canopy Growth, and Cronos have?

The answer may be not much. As it turns out, analysts polled by S&P Global Market Intelligence predict Aurora Cannabis won't turn FCF-positive before 2026. Canopy Growth will do so only in 2027, and Cronos may literally never generate positive cash profits for its investors.