While it has been a volatile ride due to the pandemic, economic challenges, and geopolitical instability, the stock market has delivered strong returns over the past five years. Plenty of companies have failed to keep up with this pace, though. One of them is Tilray Brands (TLRY 0.32%), a leader in the cannabis industry.
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A wealth destroyer
Since 2020 (and even before), Tilray's financial results have been unimpressive, at best. The company faced significant challenges in the marijuana sector, including stiff competition, legal barriers to loans, and stringent regulatory requirements. Tilray has tried to stabilize its business by making acquisitions, including some in the craft brewing industry that allowed it to diversify its operations. Despite these efforts, Tilray stock has remained southbound over the past half a decade.
The company has produced a compound annual growth rate (CAGR) of -21.32% in the past five years. So $500 invested in Tilray five years ago would be worth $150.76 today. By way of comparison, the same amount invested in an ETF that tracks the performance of the S&P 500 would be worth a cool $1,031.74 today, thanks to the index's positive CAGR of 15.59%.
The future is dim
Can Tilray turn things around? The market has been excited about the possibility that the legal landscape in the U.S. cannabis industry could soon change for the better. And during Tilray's latest quarterly update, it reported a rare net income. None of these developments is particularly novel, though. We've seen them before, and Tilray has always disappointed afterward. Could things be different this time? Maybe.
However, given the company's track record, the significant challenges it still faces, and the uncertain future of the cannabis industry, the stock still looks far too risky. In another five years, another $500 invested in Tilray could be worth even less.
