|Bid||18.20 x 900|
|Ask||18.22 x 1100|
|Day's Range||18.00 - 18.64|
|52 Week Range||18.00 - 106.00|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Marijuana stocks surged Thursday on promising regulatory develops in the U.S. and Canada to give one major weed ETF its best day of 2019.
(Bloomberg) -- The bear market in pot stocks has left billions in convertible debentures underwater, meaning cash-starved companies may have to “creatively restructure” their debt or pay a bill they didn’t expect would come due.Cannabis companies hopped into convertibles in the last three years when their stock prices were soaring and traditional debt markets were largely closed to the untested, unprofitable and stigmatized sector. Issuers that tapped the U.S. markets included Canadian pot giants Canopy Growth Corp., Aurora Cannabis Inc., Tilray Inc. and Aphria Inc.Converts are a form of interest-paying debt that can be converted into stock at a set price. Investors generally buy them on the assumption that shares will appreciate, giving them the opportunity to convert at a discount. If they choose not to convert, companies have to repay the principal when they mature.That was appealing when stocks were appreciating, but the recent rout in what had been high-flying marijuana stocks has left the shares far below the conversion price -- at just the time when cash-strapped companies are finding it tough to raise capital.“We expect more companies with near-term maturities to attempt to creatively restructure their converts if they can,” said Neil Selfe, founder and CEO of Infor Financial Group Inc., a Canadian investment bank that’s active in the cannabis industry. “We are very busy on a number of restructuring and debt-related files given that the equity markets are closed.”When Tilray announced its $475 million bond in October 2018, its conversion price of $167 -- when the embedded stock option would get triggered -- wasn’t far off from where shares were trading, roughly in the $140-$150 band. Its stock has since fallen 87% to $21, meaning investors hoping to convert are banking on a more than 700% rally.Tapping the convertible market in the U.S. gave cannabis companies two significant advantages: a “quantum of capital” and access to an institutional investor base, said Iain Franks, head of convertible and equity-linked products at Cowen Inc. The convertible market in Canada is primarily driven by retail investors.“Cross-listing equities to a U.S. exchange and tapping the U.S. institutional market provides issuers and investors with certain validation that the cannabis sector is real and investable,” Franks said.There was a natural demand for cannabis convertibles in the U.S., especially from hedge funds that were quick to snap up the stocks, according to bankers familiar with the matter, who requested anonymity due to sensitivities surrounding the marijuana market.But cannabis companies’ high-risk credit profiles meant terms were generally less favorable than other issuers, at a time when the pricing environment had been stronger than ever.The summer of convertibles in 2019 meant tech companies like Snap Inc. or industrial issuers such as Fortive Corp. could get sub-1% coupons and 40%-plus conversion premiums. Meanwhile, cannabis convertibles -- many of which aren’t due to mature until 2023 -- have had 4%-plus coupons and sub-25% conversion premiums.“For investors, given how far out-of-the-money the notes are and current trading prices, the securities trade more as a fixed-income substitute with higher yield,” Franks said. “For the issuing companies, unless the valuations recover to 2018 levels, it means the securities will need to be refinanced at some future point.”Last week, Aurora became the first big cannabis company to restructure its converts. It had C$230 million of 5% notes maturing in March 2020 with a conversion price of C$13.05 per share. Shares were trading at C$4.38 when it announced that holders could convert early at a 6% discount to its recent trading price. Holders of 94% of the securities took them up on the offer.“The market was concerned about where we would get that cash to settle that liability in March,” said Aurora Chairman Michael Singer. “That’s gone a long way to strengthen our balance sheet.”However, Aurora’s shares tumbled 29% in the two days after it announced the early conversion, which will dilute its share count by approximately 6%.“Financings like this at these levels are massively dilutive to existing shareholders and it isn’t a surprise that they would react negatively,” said Infor’s Selfe.The average retail investor was probably unhappy at the dilution but it provided an appealing option for institutional holders, who can see long-term value in a company that may otherwise have run out of cash, according to Cowen analyst Vivien Azer.“Ultimately what will benefit these retail investors is more institutional money coming into these stocks and driving down volatility and making more capital available to drive share prices higher,” Azer said. “If this is what needs to happen to clean up these stories so we can get incremental institutional capital in these names, everyone benefits.”To contact the reporters on this story: Kristine Owram in New York at firstname.lastname@example.org;Crystal Kim in New York at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Scott Schnipper, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
A wave of disappointing earnings caused a bloodbath in marijuana ETFs last week. However, talks of an end to the federal embargo on marijuana could turn this segment around.
Investing.com – Canopy Growth has plunged in recent months to levels that finally make it worth buying, Bank of America said on Wednesday, sending shares of the Canadian cannabis producer sharply higher.
While some market analysts point to a blue wave being value destructive to the overall market, it could boost cannabis stocks, says CFRA's Garrett Nelson.
Ask Benjamin Witte about Recess, and one of the first places he’ll send you is the company’s Instagram page.
Tilray Inc. (NASDAQ:TLRY) and HEXO Corp. (TSX:HEXO)(NYSE:HEXO) are two key stocks to keep an eye on as the cannabis space ramps up for winter.
(Bloomberg) -- Tilray Inc.’s Canadian operations should be profitable sooner than the late 2020 target set for the company as a whole, according to Chief Executive Officer Brendan Kennedy.The cannabis company said Tuesday that it expects to generate overall positive earnings before interest, taxes, depreciation and amortization by the final quarter of next year. However, Kennedy said its primary Canadian business should reach the key metric sooner than that.“It’s likely that our business in Canada will be Ebitda positive before the rest of our business, just because it’s at a different stage of development,” he said Wednesday in an interview with Bloomberg TV on the sidelines of Cowen & Co.’s cannabis conference in Boston. “That business is much more mature. We’ve been operating it for six years.” Once-bullish investors have increasingly punished cannabis companies that don’t show a clear path to profitability. Tilray’s shares have fallen about 70% since the beginning of the year amid broad-based weakness across the sector. The stock was also volatile on Wednesday after the company posted a wider-than-expected Ebitda loss.Management’s optimistic forecasts have been thwarted due to a slower-than-expected retail rollout in Canada and regulatory issues in the U.S., but Kennedy said he’s confident that Tilray will meet its guidance, which assumes 800 to 1,000 stores open by the end of 2020.“We have some buffer in our targets,” he said. “That gives us a lot of confidence.”Tilray also said it has enough cash to fund its operations until it reaches positive Ebitda in late 2020, but Kennedy said it has options if it does need to raise capital.“We have about $300 million in real estate and facility assets that we own completely, so that’s clearly one option,” he said. “But at this point we haven’t moved very far down any of those paths.”To contact the reporter on this story: Kristine Owram in New York at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Jennifer Bissell-LinskFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Tilray, Inc. (TLRY) delivered earnings and revenue surprises of -72.41% and 3.05%, respectively, for the quarter ended September 2019. Do the numbers hold clues to what lies ahead for the stock?
Chegg, C.H. Robinson Worldwide, Tilray, Anheuser-Busch InBev and Novartis highlighted as Zacks Bull and Bear of the Day