What Happened?
Shares of cannabis company Tilray Brands (NASDAQ: TLRY) jumped 24.9% in the morning session after the company reported third-quarter financial results that topped analyst expectations.
For the quarter, Tilray announced revenue of $209.5 million, marking a 4.7% increase from the same period last year and beating Wall Street's forecasts. The company showed significant progress toward profitability. Its operating margin dramatically improved to 1%, a sharp turnaround from negative 18.3% in the prior year's quarter. Furthermore, adjusted earnings per share reached breakeven at $0.00, an improvement from a loss of $0.04 a year ago.
The company's cash burn also slowed considerably, with free cash flow improving to a loss of $10.86 million compared to a loss of $42.02 million in the same quarter last year. These positive developments overshadowed a slight miss on adjusted EBITDA, which came in at $10.18 million.
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What Is The Market Telling Us
Tilray’s shares are extremely volatile and have had 78 moves greater than 5% over the last year. But moves this big are rare even for Tilray and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 9 days ago when the stock dropped 7.9% on the news that signs of weakening consumer health and a cautious outlook for the upcoming holiday season emerged.
The Conference Board reported that its consumer confidence index fell more than expected in September, hitting its lowest level since April. This drop is fueled by growing pessimism among Americans regarding inflation and a softening job market. Compounding these concerns, a pre-holiday survey indicates that the vast majority of consumers plan to cut back on spending compared to last year, citing the rising cost of living. With shoppers expected to prioritize essentials, discretionary categories like luxury items and home goods could face significant headwinds, creating a challenging environment for retailers.
Tilray is up 47.8% since the beginning of the year, and at $2.16 per share, has set a new 52-week high.
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