Retail traders are cheering on Tilray’s 27% pop after the cannabis company’s first earnings report since merging with Aphria

Tilray marijuana
  • Retail traders are cheering on Tilray’s 27% stock pop on Wednesday after the cannabis company turned in its first earnings report since merging with Aphria.
  • A Wall Street Bets post highlighted that the cannabis company increased EBITDA 285% year over year.
  • Tilray is far from it’s 2018 all-time highs but many retail traders seem optimistic the stock will rally “to the moon.”
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Retail investors on Wednesday cheered Tilray’s 27% single-day stock pop after the cannabis company recorded its first quarter of earnings after merging with Aphria.

The Toronto, Ontario-based firm jumped to an intraday high of $16.18 Wednesday, the highest point in over two weeks, but still well below its post-IPO record of $300 in 2018.

“$TLRY this is going back to $150. Buy and hold!” one user said in Stocktwits. Another commented that the stock had potential to be “life-changing.” Tilray was trending #1 on Stocktwits Wednesday morning.

The cannabis company posted net income of $33.6 million for the fiscal fourth quarter, compared to a loss of $84.3 million from the prior year. EBITDA nearly quadrupled to hit $12.3 million.

“Still down bad but we’re getting there. To the moon boyz!” one Reddit user commented on a WallStreetBet’s post highlighting the company’s 285% yoy adjusted EBITDA increase.

Tilray’s stock has fallen roughly 5% since it completed its merger with Aphria in May, but the company said it has already benefited from millions of dollars in cost savings from the combination.

“In a very short period of time since our business combination was finalized, we transformed and strengthened Tilray, delivered solid results amid continued COVID-19 lockdowns and restrictions and achieved $35 million in synergies to date – well on our way to delivering $80 million in cost savings over the next 16 months,” said Tilray CEO Irwin D. Simon.

Read more: These 5 stocks offer the most potential for a short squeeze this week for retail investors, according to Fintel

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A rotation into cannabis stocks by retail investors has a lot more room to run as the latest meme-stock rally fades, research firm says

Tilray cannabis marijuana
A worker smiles as she shows cannabis plants at the Tilray factory.

  • Cannabis stocks may be the next area of attention for retail investors as a recent rally in meme stocks fizzles, says Vanda Research.
  • Inflows for Tilray and Sundial Growers have picked up this week.
  • “Retail purchases of meme stocks probably peaked on Wednesday,” said Vanda.
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The meme-stocks rally that’s propelled AMC Entertainment up more than 2,200% so far this year is showing signs of exhaustion, but a recent pickup in buying of cannabis stocks including Tilray suggests that space could be the next center of attention for retail investors, according to a research firm.

“Retail purchases of meme stocks probably peaked on Wednesday,” said Vanda Research on Friday, noting a slowdown in net inflows into shares of AMC, the top recipient of retail investment money in recent weeks. Its rally has carried through to GameStop, BlackBerry and other stocks favored by retail investors active on social media such as Reddit’s Wall Street Bets platform. Vanda monitors retail trading activity in more than 9,000 US stocks and ETFs.

Meanwhile, inflows of $28.6 million into shares of cannabis companies Tilray and Sundial Growers on Thursday were the strongest since earlier rallies in the first quarter of the year. That marked the first clear signs of a rotation out of meme stocks, said Vanda. There was also a significant pick-up in retail flow on Friday for Tilray, Sundial and Cronos, three of the largest cannabis stocks traded in the US.

Meme stocks bounced back into the spotlight for retail investors in late May as bitcoin and other cryptocurrencies were crashing. AMC shares began to surge after major shareholder Dalian Wanda Group sold almost all of its remaining stake in the company. Redditors cheered the newly available shares and flexed their newfound weight in the market.

While meme stocks are still heftier in value than weeks before, the rally was starting to fizzle with AMC shares pulling back. AMC on Wednesday had $66 million in new inflows, less than half of the $136 million mln it had averaged in the previous two sessions, said Vanda. BlackBerry picked up some of the slack by drawing in $110 million for its largest day of retail buying in 2021.

However, “as opposed to BlackBerry, we think the rotation into cannabis stocks has a lot more room to run,” said Vanda, adding that Sundial and Tilray were the fourth and seventh-most active tickers on WallStreetBets forums on Thursday.

Tilray and Sundial jumped during the week after Amazon said its public policy team will back the Marijuana Opportunity Reinvestment and Expungement Act of 2021. The MORE act would, among other actions, end criminal penalties for anyone who sells cannabis in states where it’s legal.

“Despite the low chances that the Act is passed in the Senate (due to the filibuster), increasing media coverage is likely to attract the attention of the average retail investor,” said Ben Onatibia, a senior strategist at Vanda.

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Tilray and Sundial embark on 2-day rally after Amazon says it stands behind federal marijuana legalization

Tilray marijuana
A Tilray worker tends to cannabis plants.

  • Tilray and Sundial are rallying for a second day after Amazon endorsed a federal marijuana legalization bill earlier this week.
  • The two Canadian cannabis stocks are beloved by retail traders on Reddit investing threads.
  • Tilray and Sundial were part of the meme stock rally earlier this year amid the GameStop frenzy.
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Canadian cannabis companies Tilray and Sundial are on a two-day rally after Amazon announced it would support a federal bill to legalize marijuana – and retail traders are celebrating.

Shares of Tilray jumped 12% to $19 Wednesday and rose 9% in early morning trading Thursday. Last month, Tilray completed its acquisition of Aphria, making the combined business the largest cannabis company in the world by revenue.

As for Sundial, the stock closed 13% higher at $1.13 Wednesday and jumped another 17% Thursday morning.

Earlier this week, Amazon said its public policy team will back the Marijuana Opportunity Reinvestment and Expungement Act of 2021, also called the MORE act, which would end criminal penalties for anyone who sells cannabis in states where its legal, decriminalize the use of cannabis in the US, and allow states to establish commercial marijuana sales.

Retail traders bullish on cannabis stocks have been hyping up the companies on Reddit’s top investing threads, and the sentiment is very positive. According to HypeEquity data, they were two of the top talked-about companies Wednesday among a group of 18 meme stocks, including AMC, Bed Bath & Beyond, and GameStop.

The stocks have seen a “significant pickup” of retail flows in recent days – the most since the meme stock frenzy began earlier this year, Vanda Research said in a recent report, noting the MORE Act as a catalyst for the uptick. The bill, which passed the House of Representatives in December, has “low chances” of being passed in the Senate, Vanda Research analysts said, but “increasing media coverage is likely to attract the attention of the average retail investor.”

In January, an army of retail traders poured into GameStop, starting a new trend of meme stocks. Amid a broad rally in meme stocks, Tilray and Sundial also surged but declined in the following months. Meme stocks have picked up again in recent weeks, though, led by an unprecedented rally in movie theater chain AMC Entertainment.

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Harvest Health surges 19% after Trulieve acquires the cannabis company for $2.1 billion in stock

marijuana cannabis
Employees tend to medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel.

  • Trulieve is acquiring Harvest Health in a $2.1 billion all-stock deal.
  • The purchase price in the deal implies Trulieve paid a 34% premium from Friday’s closing price for Harvest.
  • The combined company is expected to turn in $1.2 billion in revenue in 2021.
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Harvest Health stock surged as much as 19% on Monday after Trulieve acquired its cannabis industry rival for $2.1 billion in an all-stock deal.

Under the terms of the agreement, Harvest shareholders will receive 0.1170 Trulieve shares for each Harvest share held, implying a price per Harvest share of $4.79, a 34% premium to the closing price on May 7, 2021.

The deal comes just over a year after Harvest and Chicago’s Verano Holdings mutually terminated an $850 million merger deal.

This acquisition will allow Trulieve to expand its cannabis business across the nation as Harvest has specialized in similar vertically integrated cannabis operations in the west coast and northeast regions where Trulieve doesn’t have access.

“Harvest provides us with an immediate and significant presence in new and established markets and accelerates our entry into the adult-use space in Arizona,” Kim Rivers, Chief Executive Officer of Trulieve, said. “Trulieve and Harvest are leaders in our markets, recognized for our innovation, brands, and operational expertise with true depth and scale in our businesses.”

“We look forward to providing best-in-class service to patients and customers on a broader national scale as we create an iconic US cannabis brand,” Rivers added.

Mike Regan, the founder of Denver-based MJResearchCo told MJBizDaily that the business combination will make Trulieve’s debt burden “more manageable” and gives the firm “scale in many other states, including Arizona and Pennsylvania.”

The combined company is expected to have revenue of $1.2 billion and an adjusted EBITDA of $461 million in 2021.

It will have operations in 11 states, comprising 22 cultivation and processing facilities along with 126 dispensaries.

Trulieve stock traded down 5.21% as of 3:10 p.m. ET on Monday after news of the acquisition broke, while Harvest Health stock traded up 13.69%.

Harvest Health Chart 2
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Aphria sinks 14% after earnings and revenue fall short of estimates in fiscal third-quarter results

  • Aphria stock fell as much as 14% on Monday after reporting sales and operating income that missed analyst forecasts.
  • The Canadian cannabis producer turned in revenue of $153.6 million and a $361 million net loss.
  • CEO Irwin Simon said, “The duration and impact of lockdowns…were greater than we initially anticipated.”
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Canadian cannabis producer Aphria saw its stock fall as much as 14% on Monday after the company turned in a disappointing fiscal third-quarter earnings report.

Aphria said it generated revenue of $153.6 million in the quarter compared to analysts’ consensus expectations for $163.3 million. Revenue was up 6.4% year-over-year, but sequentially it fell 4.3%.

Adjusted EBITDA came in at $12.7 million in the fiscal third quarter, which was below analyst consensus estimates for $14.9 million.

Aphria also turned in a record net loss of $361.0 million, or $1.14 per share, in the fiscal third quarter. The loss was partly due to increasing production costs at the firm.

The cash cost to produce dried cannabis per gram rose 13.9% quarter-over-quarter in Aphria’s quarterly report and adjusted cannabis gross margin sank to 39.2% vs. 45.9% in the prior quarter.

The Leamington, Canada-based company saw its cannabis sales fall to 18,695 kgs in the fiscal third quarter as well, a decrease of 30.1% compared to the fiscal second quarter.

The company’s CEO Irwin Simon pointed to the impact of lockdowns as his reasoning for the disappointing results.

“The duration and impact of lockdowns across many of the regions we operate in, particularly in Canada, were greater than we initially anticipated for the cannabis industry and our business; however, we believe Aphria remains well-positioned with our leading brands and market share to experience a robust increase in our top-line as the market improves.” the chief executive officer wrote in a press release.

One bright spot in the fiscal third-quarter report came from SweetWater, a cannabis brewing company Aphria acquired for $300 million in 2020. SweetWater saw sales climb from $0.9 million last quarter to nearly $15 million.

Aphria is set to merge with fellow cannabis producer Tilray to make the largest cannabis company in the world in terms of revenue pending shareholder approval on Wednesday.

The combined company has plans to continue its international expansion as the regulatory environment for cannabis producers and retailers continues to improve.

Aphria traded down 11.80% as of 10:07 a.m. ET on Monday.

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Cannabis stocks surge after Governor Andrew Cuomo says New York is ‘very close’ on legalization

marijuana cannabis
Employees tend to medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel.

  • Cannabis stocks leaped higher on Monday after Governor Andrew Cuomo said New York is “very close” on legalization.
  • The comments came at a Monday afternoon news conference, in which Cuomo added that “we have to get it done this year.”
  • Shares of several marijuana sector ETFs surged as much as 4% in Monday trades.
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Cannabis stocks moved higher on Monday after Governor Andrew Cuomo said New York is “very close” on legalizing the drug for recreational use.

Shares of Tilray and Aphria traded up as much as 14% and 12%, respectively, while marijuana ETFs like the ETFMG Alternative Harvest and AdvisorShares Pure Cannabis ETFs were up as much as 4%.

“I think this [cannabis legalization] should’ve been passed years ago,” Cuomo said in an afternoon news conference, before adding “we have to get it done.”

“I think too many people have been imprisoned, incarcerated, and punished. Too many of those people are Black, Latino, and poor. It’s exaggerated the injustice of the justice system,” Cuomo added.

Like many other states that have considered the benefits of marijuana legalization, Cuomo said the measure could help raise revenue for the state’s deficit, which surged amid the COVID-19 pandemic.

But one analyst from BTIG thinks Cuomo is pushing hard for marijuana legalization to distract from recent sexual harassment allegations made against him. BTIG thinks a vote on the measure could come before the April 1 due date for the state’s budget.

If New York does legalize cannabis, it would likely represent a seminal moment in the cannabis reform and investment movement, as the fourth most populous state would grant its residents permission to consume the drug legally.

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The first US cannabis ETF surpassed $1 billion in AUM in its first 6 months of trading

Cannabis marijuana pruned
Cannabis plants are pruned at a grow facility in Oregon

The AdvisorShares Pure US Cannabis ETF has surpassed $1 billion in assets under management, according to a company statement released Tuesday.

The ETF, which trades under the ticker MSOS, launched on September 2, 2020 and has grown from $2.5 million in assets to now $1 billion in just six months. The fund has returned 110% since its inception and 37% in 2021 alone.

The AdvisorShares ETF was the first US exchange traded fund to focus solely on American cannabis companies and multi-state operations (MSOs), or companies directly involved in the legal production and distribution of cannabis. 

The fund’s inflows are a sign of growing investor interest in the cannabis space amid speculation that the Biden administration will keep its campaign promises and decriminalize marijuana. Some Democrats in Congress have pushed even further, advocating for the full legalization of cannabis in the US. 

“There’s a lot of excitement surrounding the cannabis investment space right now and for a variety of reasons,” said Dan Ahrens, AdvisorShares’ chief operating officer and portfolio manager of MSOS. “We firmly believe that the U.S. cannabis market provides a compelling long-term investment opportunity that clearly differentiates itself from other areas of the globe.” 

Other cannabis ETFs have also  performed well in 2021. Even after shedding gains from earlier this month, the ETFMG Alternative Harvest ETF is up 63% year-to-date, while the Amplify Seymour Cannabis ETF is up 81% year-to-date.

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