One of the starkest examples of the marijuana industry’s struggles is the trajectory of one of its flagship stocks, Tilray (NASDAQ: TLRY).
In November 2018, Canada was mere weeks into its first phase of legalization. Investors piled into the nation’s pot companies, perhaps envisioning a domino effect in which other countries would sanction the drug, one after another. That still hasn’t happened to any great degree. Meanwhile, the domestic market has a set of problems to contend with. To be blunt, an investment made in Tilray wouldn’t amount to much these days.
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That’s putting it mildly. A $1,000 Tilray bet made in late November 2018 on the company’s U.S.-listed stock would have shriveled to a mere $11 at the same point in 2024. That’s a decline of almost 99%, akin to burning nearly an entire pile of money.
The Canadian pot industry has struggled, at times mightily, since its inception.
Many companies, large and small, sprang to life around the time of legalization in a country that isn’t all that populous relative to its size (just under 39 million versus almost 342 million in the U.S.). The slow, hiccup-filled rollout of the official weed market in certain provinces — like the most significant one, Ontario — didn’t help either. Another negative factor among several is the persistence of the gray and black markets for the drug.
To its credit, Tilray has been making an honest attempt at a pivot. It plunged into the booze business, snapping up a set of U.S. craft brewers — an attempt at being something of a player in a business somewhat complementary to weed.
Yet alcohol, in general, isn’t much of a growth story, and Tilray continues to struggle on the bottom line. Net profits have been rare and anemic, while on both sides of the U.S./Canada border competitors abound. Tilray’s stock price is awfully low for a reason. That doesn’t mean it’s a bargain; rather, it’s probably a company to avoid.
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