What happened
Shares of Tilray Brands (TLRY 1.71%) are defying the negative market momentum with big gains today. The stock popped nearly 30% and held on to a gain of 27.9% as of 11:05 a.m. ET on Tuesday.
The Canadian company most known for its cannabis business was in the news for its other growing segment today.
So what
In addition to growing its Canadian and international cannabis sales, Tilray has been working to build a portfolio of consumer packaged goods. It has acquired a mix of U.S.-based craft breweries and distilleries over the past several years. That strategy hasn't helped the stock, though, as shares have declined significantly over the past three years.
But it just announced a major addition to that portfolio with the acquisition of eight beer and beverage brands from Anheuser-Busch InBev. Tilray is adding brands including Shock Top, Breckenridge Brewery, and Redhook Brewery to a portfolio that already includes SweetWater Brewing and Montauk Brewing.
Now what
Investors are cheering the deal since it will result in Tilray's beverage portfolio bringing in annual revenue that would be almost equivalent to half of its fiscal 2023 full-year revenue. Tilray's fiscal year ended on May 31 with total net revenue of $627 million. It expects its beverage brands that include the latest acquisitions to bring in about $300 million in sales annually.
Tilray's U.S. beverage segment is already profitable in its own right. The additional brands boost the company from the ninth largest to the fifth largest craft brewer in the U.S.
Investors are cheering the news today, but the real payoff would come if marijuana is legalized at the federal level in the U.S. Tilray would then be able to leverage its existing beverage infrastructure and distribution network to boost its cannabis sales.
Today's move makes sense since it is a positive development for the business and its profitable beverage segment. But Tilray investors are still counting on the federal legalization of pot to see the stock rise meaningfully from here.
