Investors have jumped into the marijuana market aggressively, banking on the rising demand as more jurisdictions legalize cannabis to drive sales across the industry. Among the top stocks in the industry, Tilray (TLRY) has gotten a lot of attention from its initial public offering on the Nasdaq Stock Market earlier this year and its subsequent surge amid excitement for the legalization of recreational marijuana in Canada.

Tilray expects to release its third-quarter financial report on Nov. 13, and investors have high hopes that the newly public company can live up to all the hype. Yet rather than focusing too much on current results, you should concentrate on what Tilray says about its immediate future. The company will give some good information on Tuesday, but here's an early look at what you can expect from its quarterly report.

Two-story building with Tilray logo on side.

Image source: Tilray.

Stats on Tilray's third-quarter earnings



EPS estimate (loss)


Last quarter's EPS


Revenue estimate

$10.12 million

Change from last quarter's revenue


Source: Yahoo! Finance, S&P Global Market Intelligence.

What investors want to see

Those following Tilray have had mixed views about the medical marijuana specialist's likely future earnings. They've become more optimistic about Tilray cutting its losses in the third quarter and for the rest of 2018, but they've widened their loss projections for 2019. The stock has been extremely volatile since the company made its first earnings report as a public company three months ago -- it has more than doubled since late August but has been up to a much greater extent before the past month's slide.

Tilray's second-quarter financial report in August produced a lot of excitement shortly following the company's IPO. Sales climbed by almost 25% from three months earlier to $9.74 million, roughly doubling year over year. As is typical for small upstart companies, Tilray saw losses widen considerably as it sought to ramp up its production. Thanks to the IPO, Tilray dramatically improved its cash on hand in a way that didn't show up in the June 30 numbers, but investors focused most of their attention on how the company would take advantage of opportunities to supply the Canadian market. In addition, efforts to build up international sales got a lot of attention, with nearly a dozen countries on the list of markets that Tilray served.

CEO Brendan Kennedy summed up his view of the company's performance and outlook. "We are very pleased with our strong start to 2018," Kennedy said, "[and] Tilray is well positioned to continue to pioneer the development of the global medical cannabis market and to become a leader in the adult-use cannabis market in Canada." The CEO pointed to Tilray's global strategy, distribution network, and research commitment as playing pivotal roles in the company's long-term success.

The big question for Tilray

As useful as it'll be to see how much growth it was able to produce in the third quarter, many investors won't really be satisfied by whatever the company says about that period. That's because Canadian legalization only happened in October, after the end of the third quarter. As a result, firm numbers about how the rollout went won't show up until Tilray releases fourth-quarter financials early next year.

However, it's likely that the company will give some information about the early stages of the introduction of recreational cannabis in Canada. That could ignite a new surge in excitement about Tilray, despite the fact that it has an extremely high valuation that many believe is unwarranted by its fundamental business prospects.

Even if early sales are encouraging, Tilray also has to boost its production capacity. Other industry players like Canopy Growth (CGC -0.30%) have already spent aggressively to build growing facilities that will give them a greater ability to supply the market, as well as to offer higher-margin cannabis-derived products to maximize profit. Investors will have to pay close attention to ensure that development projects are on track and will kick in fast enough to avoid losing market share to nimbler competitors.

Big moves for Tilray stock aren't ending soon

Earnings results often give rise to big stock price moves, and Tilray has already been among the most volatile marijuana stocks. With all eyes on the medical cannabis company, it will have to work hard in order to satisfy investors that its prospects warrant the stock's current valuation. Otherwise, the disappointment could prove problematic for shareholders after the report.