Is Tilray (TLRY) Worth $10 Billion?

For the past couple of years, the marijuana industry has been budding before our eyes. However, the legal pot industry really took shape in 2018, with the passing of the Cannabis Act in our neighbor to the north. Beginning Oct. 17, 2018, recreational marijuana became legal for purchase by adults throughout Canada, ending nine decades of adult-use prohibition. When the industry is running on all cylinders within a few years, it could be generating more than $5 billion in added annual sales.

The prospect of rapid growth is what’s helped push most marijuana stocks into the stratosphere. In fact, quite a few have risen in excess of 1,500% just since the beginning of 2016.

Tilray’s third-quarter report won’t have investors seeing green

Of course, in recent months all eyes have been on bottle-rocket Tilray (NASDAQ:TLRY). British Columbia-based medical cannabis grower Tilray made history in late July by becoming the first pot stock to go the initial public offering route on a major U.S. exchange. Since listing its shares at $17, the stock rallied to peak on an intraday basis in mid-September at exactly $300 a share, briefly hitting a $28 billion valuation. Since then, the company’s market cap has settled around $10 billion, making it either the largest or second-largest marijuana stock by market cap, depending on the day and how volatile these stocks have been.

The big question (other than “Are marijuana stocks in a bubble?”) has been: “Is Tilray really worth $10 billion?” Following the company’s release of its third-quarter operating results, we can pretty safely determine that the answer is a resounding “no.”

For the quarter, Tilray recorded $10.05 million in sales, representing an 85.8% increase from the year-ago quarter. This improvement in sales was driven by a more-than-doubling in the total kilograms sold to 1,613 kilos from 684 kilos in Q3 2017. The quarterly operating press release also highlights the fact that…

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