The cannabis industry has been struggling for quite some time, and so are the companies within it. Tilray Inc (NASDAQ:TLRY) is one such company that has had rough months with issues of financing capital and failing stock. The management of the company also seems to less confident having sold a major chunk of the positions of Tilray.
The COVID-19 pandemic fears resulted in the stock of Tilray to fall by over 90%- from $20 to $2- in just a few weeks. The stock did manage to bounce back to a mid $6 range indicating a 300% increase.
Key Factors in Focus
Many investors are showing short-interest in the stock of the company. Just over the past month, the number of shares reached 15 million peaks from the previous figure of 10 million a few months ago, representing a 50% increase. This means that out of every seven shares, a share of Tilray is being shorted. This shows that the short-sellers believe that the share will fall even lower from the current low value.
Tilray had recently announced a fresh capital raise selling shares worth 7.25 million dollars. This increased the number of shares resulting in dilution of shareholders and ultimately causing the share price to plunge. The company had also sold warrants – which were pre-funded- for purchasing further 11.25 million shares. Another warrant for 19 million shares was also announced by the company later.
Many analysts have downgraded the stock of Tilray to underperform, reducing even their price target. Jefferies expects the company to post a net loss of $1.14 per share for fiscal 2020 and a net loss of $0.80 per share for fiscal 2021. Many analysts are of the opinion that the cannabis industry itself won’t deliver exceptional performance, estimating the total sales to be 2.3 billion Canadian dollars in this fiscal year. For Tilray to gain new investors, it will have to prove a lot still.