Investing in Tilray (TLRY -4.62%) stock in recent years hasn't been for the faint of heart. Shares of the global cannabis company have soared -- and they've sunk. Today, though, Tilray Brands is arguably among the companies best positioned to profit as cannabis is legalized in more places.
In this article, we'll cover how to invest in Tilray. You'll also learn factors to consider in deciding whether the marijuana stock is a good pick for your investment portfolio.
Stock
How to buy
How to buy Tilray stock
Investing in marijuana stocks such as Tilray is really no different from investing in any stock. There are four basic steps to follow:
Step 1: Open a brokerage account
You'll first need to open a brokerage account. In the past, interactions with brokers were primarily done over the phone or in person. Today, transactions are usually conducted online.
There are quite a few brokerages from which you can choose. They offer services that are quite similar. However, there are a few differentiating factors, including:
- Commissions (some online brokerages have even eliminated trading commissions altogether).
- User-friendliness of the brokerage's platform.
- Support for buying fractional shares of companies.
- Other resources, such as educational information about investing.
Step 2: Figure out your budget
It's important to know how much money you can afford to invest in Tilray (or any other stock, for that matter). The best way to determine this amount is to budget. If you don't already have a budget, you'll want to list all your sources of income along with how much income they generate. Also, identify all your ongoing expenses.
Step 3: Do your research
It's wise to do your research before any major purchase, whether we're talking about a house, a car, a new computer, or a stock. What kind of research should you specifically do with respect to Tilray?
First, read through the investor presentations available on its website. They'll give you a sense of Tilray's business strategy.
Thoroughly examine Tilray's most recent 10-K annual reports and its 10-Q quarterly reports. These regulatory filings will help you better understand the company's financial condition. The 10-K reports will also provide a pretty good picture of the risks that Tilray faces.
Check out any transcripts that are available from Tilray's quarterly conference calls as well. These usually include the prepared remarks for the company's chief executive officer (CEO) and chief financial officer (and sometimes other executives), plus a question-and-answer session with analysts. The comments made in the conference calls can sometimes reveal more about what's going on with the company and where it's headed than you'll be able to find out elsewhere.
You'll also definitely want to look at Tilray's key financial and valuation metrics. In particular, look at the company's cash position. Cannabis companies, in general, often burn through their cash and turn to stock offerings to raise additional capital. This causes the value of existing shares to be diluted.
Step 4: Place an order
The exact process involved with placing an order to buy Tilray stock will vary somewhat depending on which brokerage you use. However, the steps shouldn’t be too different between brokerages. The following screenshot describes how you can place an order to buy a stock with Fidelity, one of the leading online brokerages.
The trading symbol (or stock ticker) for Tilray is TLRY. If purchasing fractional shares is supported by your brokerage, you’ll need to specify the dollar amount you want to invest. Otherwise, you’ll need to enter the number of shares you want to buy.
Most, if not all, brokerages will ask you to specify which order type you prefer -- market order or limit order. What’s the difference between these order types? Market orders allow the transaction to be executed immediately at the current market price. Limit orders for purchases will be executed only if and when the stock trades at or below the specified share price. The Motley Fool recommends using market orders to ensure that trades are executed immediately.
Should I invest?
Should I invest in Tilray?
The answer depends on you.
Probably the most important factor in answering this question is your risk tolerance. Cannabis stocks tend to be highly volatile and quite risky. Tilray is no exception.
The company must pay high excise taxes in Canada. Tilray can't expand into the U.S. cannabis market because doing so would cause the company to lose its listing on the Nasdaq (NDAQ -1.75%) stock exchange.
There's uncertainty about whether Tilray's aggressive acquisitions strategy will pay off. The company acquired Montauk Brewing in November 2022. It bought Hexo in June 2023. In October 2023, Tilray acquired eight craft beer brands from Anheuser-Busch InBev (BUD -0.12%).
On the other hand, Tilray could have tremendous long-term growth prospects. Fortune Business Insights predicts that the global cannabis market will increase by a compound annual growth rate of 34% to more than $444 billion by 2030.
Tilray appears well positioned to benefit from this projected growth. The company claims the No. 1 market share in the Canadian cannabis market. It has an early-mover advantage in Europe, with operations in Portugal and Germany.
There are two potential catalysts that could be especially important for Tilray on this front. Germany, which already has a thriving medical cannabis market, legalized adult-use marijuana in 2024, although the market remains limited due to strict regulations. The U.S. could also legalize cannabis at the federal level at some point.
Cannabis isn't the only opportunity for Tilray, though. Beverage alcohol could become just as big a business for the company in the not-too-distant future. Thanks to the brands it bought from Anheuser-Busch, Tilray now ranks as the fifth-largest craft brewer in the U.S.
Profitability
Is Tilray profitable?
Tilray isn't profitable at this point. However, the company is already generating positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- an important prerequisite for achieving profitability.
Dividends
Does Tilray pay a dividend?
Most cannabis stocks don't have dividend programs. Tilray is no exception. Investors probably shouldn't expect the company to initiate a dividend anytime soon.
Exchange-Traded Fund (ETF)
ETF options
ETFs with exposure to Tilray
More than 20 exchange-traded funds (ETFs) currently hold positions in Tilray. They include:
- Amplify Seymour Cannabis ETF (CNBS 3.85%)
- ETFMG Alternative Harvest ETF (MJ -0.75%)
- Global X Marijuana Life Sciences ETF (HMLSF -1.69%)
It isn't just marijuana ETFs that own shares of Tilray, however. Other ETFs with positions in the stock include:
Stock splits
Will Tilray stock split?
While several companies have recently conducted stock splits, Tilray isn't in the group. The company has never conducted a stock split in its history and has not announced any plans to do so.
The bottom line on Tilray
Tilray is highly volatile stock that operates in a challenging industry. However, the company could have tremendous long-term growth prospects in the global cannabis market and with its expansion into beverage alcohol.
FAQ
Investing in Tilray FAQ
Is Tilray stock a good buy?
It depends on the investor. For example, income investors will want to look elsewhere since Tilray doesn't offer a dividend right now. Risk-averse investors won't find the stock attractive, either, due to its persistent volatility.
On the other hand, aggressive investors who seek to bet on the long-term growth opportunities of the global cannabis market could find Tilray appealing. The company ranks as one of the leaders in the cannabis industry. It should be well positioned to capitalize on the cannabis industry's future growth.
Why is Tilray stock so low?
Tilray’s share price has dropped more than 99% from its 2018 peak.. One reason it's so much lower is that the previous peak price reflected, to use former Federal Reserve chairman Alan Greenspan's famous phrase, "irrational exuberance" on the part of investors. The stock has fallen since early 2021 primarily due to a supply-demand imbalance in the Canadian cannabis market.
What is the future price of Tilray stock?
No one can say for sure what the future price of Tilray stock might be. It’s possible that the stock could continue to languish.
However, Tilray stock could easily move much higher over the next few years. Several potential catalysts could help, including consolidation of players in the Canadian market, further legalization of cannabis in Europe, and/or legalization of cannabis at the federal level in the U.S.
