Tilray stock is tanking today after analysts at GLJ Research offered a $0 price target for Tilray Inc (NASDAQ:TLRY) following the company's disappointing fourth-quarter results, posted earlier this week.
Earnings Disappointment
For the fourth-quarter, Tilray posted a loss per share of $0.62, which was considerably worse than the analysts’ expectation of a $0.47 per share loss and well ahead of the $0.28 per share loss reported in the same period a year earlier. Revenue did climb over 200% from Q4 2018 to C$46.94 million, but it still fell well short of the expected figure of C$73.83 million. Nearly 60% of Tilray's revenue increase in Q4 stemmed from the company's acquisition of hemp-food maker Manitoba Harvest. Tilray stock is down over 30% since those earnings were published.
Analysts Slash Expectations on Tilray Stock
Gordon Johnson of GLJ has cut his price target for Tilray from $5 to $0 after the huge loss reported by the company in Q4, and he has maintained a 'sell' rating for the Canadian cannabis firm. "In fact, even after adjusting 70% of its 4Q19 losses away, TLRY's 4Q19 non-GAAP loss was over 36% more than its 4Q19 revenue. Thus, while TLRY is guiding to positive EBITDA by 4Q20, with its performance sharply lagging bottom line 2019 GAAP EPS expectations through 2019, we see this forecast as aspirational," said Johnson. Tilray stock is currently trading for $10.33.
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Johnson pointed to the alarming rate of cash burn at Tilray as a reason for pessimism. The company secured C$70 million in an at-the-market stock issuance in the fourth quarter and an incremental debt offering of C$2.23 million; however, fourth-quarter cash and investments balance fell C$26 million from the previous three months, suggesting a quarterly cash burn rate of C$98 million, which significantly outpaces revenue of C$47 million. Tilray shares are down nearly 8% today following the downgrade.
Last month, the company announced that it was laying off approximately 10% of its staff as part of a global restructuring plan, but will it be enough to halt the decline in the faltering pot stock?
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