Tilray (NASDAQ 🙂 made headlines last week after publishing its first profitable quarter last Wednesday – on an adjusted basis. But by the end of the week, it was Aphria (NASDAQ 🙂 (TSX :), the company it would merge with to form the world's largest cannabis company, walking away with all the profits.
Shares of Tilray saw an immediate rise after last week's disclosure with net sales of US $ 50.7 million, a huge gain compared to the same period last year. It also reported a significant decrease in costs of $ 57 million, a move that helped it report an adjusted profit of $ 2.2 million over the three-month period prior to the closing of the announced merger with Aphria in the second quarter of 2021.
The news sent double-digit Tilray shares. But by the end of the week, the stock fell about half a percentage point, closing at $ 29.21 on Friday, a little over 2% lower than the week. It fell again yesterday, ending the day an additional 10% at $ 26.29.
Meanwhile, the Aphria stock closed last week with a price increase of almost 20%. Shares of the Canadian cannabis grower rallied mid-week last week based on Tilray's headlines, hitting as high as $ 21.98 before closing the week at $ 20.28. It has since returned some of those gains, closing at $ 19.35 yesterday. So far, Aphria is up about 177%
Hexo strikes deal with Zenabis
Tilray isn't the only major cannabis company that is on its way to become one of the largest in its class.
Last week, Hexo Corp (NYSE 🙂 (TSX 🙂 announced it had brought in total inventories of C $ 235 million (US $ 185.7 million). deal to acquire Zenabis Global (OTC 🙂 (TSX :), a Vancouver-based company that is one of the largest recognized producers of medical and recreational cannabis in Canada. The new combined company will be in the "top three recognized producers in terms of combined Canadian recreational cannabis sales", according to a joint statement by the companies.
The deal will increase Hexo's greenhouse capacity and immediate access. to the European medical cannabis market through Zenabis's local partner network.
Hexo's shares are up nearly 43% over the past year.
Canadian cannabis sales are on the rise, but fall short of predictions
Canadian legal marijuana sales were soaring in 2020, according to the latest statistics from Statistics Canada. But despite the bump, the numbers are lower than what analysts predicted.
In 2020, Canadians bought C $ 2.6 billion (US $ 2.1 billion) of legal recreational cannabis, more than twice as much as in 2019, according to figures released by StatsCan last week. The exact jump amounted to a sales increase of 120%. However, forecasters claimed the market would grow to over C $ 3 billion (US $ 2.37 billion), with analysts with BDS Analytics saying revenue would be C $ 3.3 billion (US $ 2.6 billion). while Cowen & Co. according to media reports, were expecting sales of C $ 3.5 billion (US $ 2.765 billion).
Despite analysts missing the mark, at least one forecast for the current year expects the Canadian recreational marijuana market to hit the C $ 4 billion (US $ 3.16 billion) mark. That's the word from Stifel-GMP analyst Andrew Carter, as reported by BNN Bloomberg.
New Jersey legalizes pot
New Jersey became the 13th state to legalize cannabis on Monday after voters backed the move last November. New Jersey joins Maine, Vermont and Massachusetts as the only other states in the Northeastern US to legalize marijuana.
The bill signed into law also allows state-approved pharmacies to sell the substance, although it may be seen up to a year before recreational cannabis sales will occur.
