In the realm of cannabis stocks, Tilray (NASDAQ: TLRY) made news when it announced that it plans to cut 10% of its workforce in an effort to cut costs and hopefully become profitable sometime soon. While generally a bad sign, investors reacted with a bit more optimism than otherwise would be expected, encouraged by the company’s efforts to improve its bottom line.

The cannabis giant has around 1,443 personnel around the world, and out of the 140 or so layoffs that are expected to take place, less than 35 of them will be in Tilray’s Toronto office. Most of Tilray’s staff is located either in Canada or in Portugal, but also has operations in Germany, Ireland, and the U.S. to name a few other countries. Well-known cannabis analysts, such as Cowen & Co’s Vivien Azer, has called the move “logical” considered the current state of the market.

“Tilray restructured its global organization to meet the needs of the current industry environment and for continued growth in 2020 and beyond,” said Brendan Kennedy, Tilray’s CEO. “These changes include an approximately 10 percent reduction in staff. By reducing headcount and cost, Tilray will be better positioned to achieve profitability and be one of the clear winners in the cannabis industry, which will drive value for our investor and employee shareholders.”

The unfortunate situation is that there is an overabundance of supply in Canada and not enough demand. This has had the effect of pushing down prices for marijuana, further hurting the margins of all but the lowest-cost producers in the country. In turn, this has made it all the more difficult for companies to see a profit, something that has eluded the large-cap cannabis stocks for the most part.

Tilray hasn’t been the only major pot stock to announce significant layoffs. HEXO (NYSE:HEXO) announced back in October that it was laying off 200 employees, while the beleaguered CannTrust (NYSE:CTST) has cut over 180 employees in September.

Despite the news, which broke quite earlier in the day, shares of Tilray didn’t plunge at all. Instead, they ended up rising by 5.5% over the course of the day. Tilray used to be one of the pricier pot stocks on the market, but over the past 12-months, the stock has lost over three-quarters of its market cap. Most analysts covering Tilray remain understandably cautious about the stock, with 13 of the 19 Wall Street analysts having a neutral “hold” rating in comparison to the six that have an optimistic “buy.” What is notable, however, is that no one has a “sell” rating at the moment, suggesting that prices won’t fall much lower than they already are at.

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