Investing.com – Tilray slumped Wednesday after more than tripling its cannabis sales in the second quarter, but at lower prices, prompting a wider-than-expected loss, leaving traders with little choice but to say "no" to weed stocks.
Tilray (NASDAQ:TLRY) reported a net loss of $0.36 a share, below consensus estimates from Investing.com for a net loss of $0.26 a share, sending the company’s shares about 14% lower. Tilray is down about 43% for the year so far.
Revenue, meanwhile, surged 371% to $45.9 billion, well above estimates of $40.35 billion. The company attributed the growth to a boost from hemp-foods producer Manitoba Harvest, which it acquired in February, the legalization of the Canadian adult-use market and growth in international medical markets, particularly in Europe.
The trip-digit revenue growth, however, was offset by surging costs and a fall in the price of weed sold per gram.
Cost of sales jumped to $33.63 billion compared to $5.57 billion a year earlier.
The average net selling price per gram decreased to $4.61 compared to $6.38 in the prior year period, with the company blaming the decline on a reduced mix of higher-priced extract products and a greater mix of lower-priced adult use.
Surging revenue growth combined with wider losses are not uncommon as cannabis producers continue to invest to ramp up manufacturing. But the decline in average selling prices raised fears of a possible oversupply, triggering a sea of red across weed stocks.
Cronos Group (NASDAQ:CRON), Canopy Growth (TSX:WEED) and Aurora Cannabis (TSX:ACB) were all nursing heavy losses for the day.
Canopy Growth’s fiscal first quarter results – due today after the closing bell – will likely provide investors with further insight into the supply-and-demand dynamics within the industry.