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Easy Come, Easy Go: How Tilray (NASDAQ:TLRY) Shareholders Got Unlucky And Saw 83% Of Their Cash Evaporate

Simply Wall St

Even the best investor on earth makes unsuccessful investments. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. So we hope that those who held Tilray, Inc. (NASDAQ:TLRY) during the last year don't lose the lesson, in addition to the 83% hit to the value of their shares. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. Tilray hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 49% in the last three months.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

See our latest analysis for Tilray

Tilray isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Tilray increased its revenue by 216%. That's a strong result which is better than most other loss making companies. So the hefty 83% share price crash makes us think the company has somehow offended market participants. Something weird is definitely impacting the stock price; we'd venture the company has destroyed value somehow. We'd recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that's for sure. Of course, markets do over-react so share price drop may be too harsh.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

NasdaqGS:TLRY Income Statement, October 3rd 2019

Tilray is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Tilray in this interactive graph of future profit estimates.

A Different Perspective

Tilray shareholders are down 83% for the year, even worse than the market loss of 0.06%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 49%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.