When a company posts record numbers, it can be a good sign that the business is doing well. But not always. There are many factors to consider when investing in a company, beyond just whether it's growing at a strong pace.
Tilray Brands (TLRY -1.50%) has been razor-focused on growth in recent years, and last week it posted its results for its 2026 fiscal year. The company boasted record numbers for the year, with net revenue totaling $915.5 million, up 11% year over year. While it sounds encouraging, here's why I'd avoid the cannabis stock at all costs.
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Tilray has leaned heavily on acquisitions to fuel its growth
From afar, Tilray might look like a good, diversified business that has expanded its reach over the years. It's less reliant on cannabis, which is a good thing given how ultra-competitive the Canadian market is. But when a company focuses too heavily on acquisitions, it becomes difficult to determine its true organic growth rate and how well it's doing when excluding acquisitions.
Take its beverage segment as a prime example. Last fiscal year, acquisitions made it look solid, with its growth rate at 19% and revenue totaling $241 million. This past fiscal year, which ended on May 31, however, beverage sales rose by less than 6% to $254 million. As there have been fewer acquisitions in the segment, its growth becomes less impressive.
Tilray has continued to grow, but mainly through acquisitions or international expansion. Those are costly growth avenues, and they can mask how the company is doing organically. In the meantime, it's still burning through a ton of cash. Over the past 12 months, Tilray used $69 million to fund its day-to-day operating activities, excluding capital expenditures. Its investing activities, which include acquisitions, depleted another $56 million during the year.
NASDAQ: TLRY
Key Data Points
The stock is down big for a reason, and a turnaround isn't on the horizon
Tilray's growth isn't nearly as impressive when considering how much cash it's burning through. That cash burn also means it's highly likely there will be continued stock offerings in the future. Those offerings dilute shareholders and can cripple an already poor-performing stock even further. In five years, Tilray's stock has crashed an incredible 97%.
There's no compelling reason to suggest things will get any better, either. It's been the same old story for Tilray this year as in the past, with investors largely unimpressed with its costly growth strategy. And until that changes, I think it's a stock that investors are better off avoiding.
