Tilray Inc (NASDAQ:TLRY), which used to be a well-known stock in Wall Street, now has nothing left to impress the investors. The Canada based company had its initial public offering (IPO) in July 2018 at a value of 18 dollars and had managed to up its value to 300 dollars per share by mid-September. The value of the stock now lies in the $2 range post the market meltdown in the previous month. The stock is now seen as a troublesome one.
What to Expect Now?
Despite being a Canadian producer, the management of Tilray had decided to focus entirely on the U.S. and the European markets. They shifted their attention only after a mere six months of sales commencement of adult-use weed in Canada. The international markets surely provide greater potentials than its home country, but this shift seemed rather odd to plenty. The shift in the growth-strategy focus also meant that the company had to lose quite some money in order to develop an infrastructure overseas. This resulted in Tilray losing on its cash pile.
The company had seemingly ended 2018 with healthy figures of the balance of cash and cash equivalents and short-term investments. The figure stood at 517.6 million dollars. Tilray, however, could not do the same in 2019. The company’s cash balance had declined below 97 million dollars by December 31, 2019. This made the company desperate to raise cash through issuing shares worth 90.4 million dollars amidst the COVID-19 pandemic.
To add to the woes, these shares so raised had warrants attached to them exercisable after six months of the issue at a price of 5.95 dollars. Simply put, this would mean further stock sale resulting in dilution of shareholders. This would also cap possible short-term/ near-future gains. With poor financials, Tilray shows no signs of profitability and would not be rather worthy of a buy.