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Recent insights from Viridian Capital Advisors shed light on the bewildering trends in cannabis stocks. Year-to-date (YTD) data indicates that U.S. multi-state operators (MSOs) and Canadian licensed producers (LPs) have experienced drastically different fates.
At a glance, U.S. MSOs show an average return of 26.4%, towering over Canadian LPs’ modest 1.3%.
However, this picture is deceiving.
If we remove the outliers—Trulieve Cannabis TCNNF, which saw significant gains, and Tilray Brands TLRY, which experienced sharp declines—the true performance is closer: MSOs at 16.79% and LPs at 25.97%.
Market Irrationality
According to Viridian, these fluctuations suggest an irrational market behavior. Before 4/20 a few Canadian stocks rose by more than 50% YTD. The volatility reflects not just company performance but broader economic factors like regulatory changes and market speculation.
Understanding Outliers: Tilray Brands, Inc. Struggles Despite Revenue Gains
Despite operational advances, Tilray faces considerable market challenges. The company reported a 30% year-over-year increase in third-quarter net revenue to $188.3 million but also a significant net loss of $105 million, a slight improvement from the previous year’s $1.2 billion loss.
However, a revision in the financial outlook—including an expected inability to generate positive adjusted free cash flow for fiscal year 2024—prompted a sharp 22.2% stock price drop.
Loading…Loading…Analyst Caution And Long-Term Performance
