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Earnings Released for Cronos and Tilray

The two major pot companies reported earnings today, here’s what you need to know.

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Since Canada officially legalized recreational cannabis consumption on Oct. 17, stores both public and private, online and bricks-and-mortar, repot that many products sold-out.

Nevertheless, marijuana stocks pulled back after legalization. Indeed, some analysts cut recreational consumption sales forecasts based on retail bottlenecks.  However, some industry executives maintain that the global market for cannabis could be as big as $500 billion.

This week provides a first glimpse into post-legalization operations. Although it’s too soon to report post-legalization earnings, reports will be closely parsed for clues nonetheless. Investors and analysts are watching this quarter’s results closely as early indicators of Canada’s recreational cannabis market.

Aurora Cannabis Inc. (TSX: ACB.TO) reported earnings Monday, and shares fell in trading thereafter to close at $8.74 Tuesday, down 5% on the day. The company stated during its Monday earnings conference call that brand awareness is important in spite of recent suspicions that buyers are brand agnostic.

Cronos Group (NASDAQ: CRON.O) reported quarterly earnings Tuesday morning. Tilray (NASDAQ: TLRY.O) released their earnings Tuesday after the close. Canopy Growth Inc. reports earnings Wednesday.

Cronos Group Earnings Estimates v. Results

Estimates: Analyst consensus predicted a $0.02/share loss and $3 million revenue.

Results: Cronos lost $0.04/share. Meanwhile revenue was up 187 percent to $3.76 million.

CRON Share Price

Cronos Group shares closed at $8.31, down 1.66% in Tuesday trading.

Cronos Group is the first pure-play cannabis company listed on a major U.S. stock exchange. The company recently focused-in on cannabinoid extracts. They’re working with Technion Research to examine using CBD in skin-care treatments. Also, Cronos is partnering with Ginkgo Bioworks to focus on culturing cannabinoids and bringing them to a broader customer base.

Nonetheless, the company stated in September that some “pharmaceutically relevant” cannabinoids are difficult to extract. Indeed, marijuana plants often have low concentrations of many sought-after cannabinoids.

Cronos offers 2 recreational cannabis products, but questions surround the actual volumes of those products available for the fourth quarter recreational market.

“While we expect Cronos to have received its sales licence for Building 4, the company’s large 280,000 sq. ft. facility in Stayner, Ontario, the first harvest from Building 4 may have only occurred in November,” said GMP Securities analyst Martin Landry.

Tilray Earnings Estimates v. Results

Estimates: Analysts are looking for the company to lose $.11/share. Sales are expected to be $10 million.

Results: The company lost $0.08/share. The company’s sales were $10.04 million.

TLRY Share Price

Tilray stock closed down to $111.55 Tuesday, a 1.67% decrease.

The company showed good revenue but lower sale prices, in contrast to Aurora Cannabis Inc. this quarter. While the vast majority of Tilray’s top line sales for this and upcoming quarters will be from the medical market, they did sign supply agreements with 5 Canadian provinces for recreational product.

In August, the company launched High Park, producing recreational weed in Canada. That subsidiary has the rights to make and sell Bob Marley’s official pot brand, among others.

Next up to report is Canopy Growth Corp. on Wednesday.

 

 

Written by Rob McLean

Rob loves staying on top of developments in the cannabis sector, and always has his finger on the pulse of real estate markets.

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