Tilray Takes Actionable Steps to Improve Its Balance Sheet

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Written By Marcus Reynolds

Tilray, Inc. (NASDAQ: TLRY) is a Canadian cannabis and beverage company. The firm has faced challenges since its IPO in 2018, with significant stock price volatility and operational struggles.

Recently, Tilray has announced several measures to improve its financial situation as it approaches the end of its fiscal year.

Previous Struggles

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Tilray’s shares soared as high as $300 in 2018 during a cannabis stock boom but quickly declined due to unmet growth expectations, significant competition, and the lack of full cannabis legalization in the US.

One major concern over the years has been the dilution of shares. The company has issued a substantial number of shares, increasing the share count significantly. Despite this dilution, Tilray remained in a net debt position, requiring substantial financial improvements.

Balance Sheet Improvements

Tilray has undertaken multiple initiatives to address its debt, including the following:

  • April 9th, 10-Q Filing: Tilray entered an agreement to exchange $41.9 million principal amount of its APHA 24 Notes by issuing up to 25 million shares.
  • April 24 to May 6, 2024: Tilray conducted private debt-for-equity exchanges, issuing up to 15.2 million shares for $24 million principal amount of 5.25% Convertible Senior Notes due June 1, 2024.
  • May 13, 2024: Tilray agreed to issue up to 13.1 million shares in exchange for $19.8 million principal amount of 2024 Convertible Notes.

By the end of the February fiscal period, Tilray had over $83 million of 2024 convertible notes outstanding. Following the recent transactions, only a few hundred thousand dollars remained, reducing total debt to just over $300 million.

The company began the current quarter with approximately $226 million in cash and short-term investments.

Recent Developments

Tilray recently announced a $250 million equity distribution agreement to raise capital and strengthen its balance sheet. With the stock trading below $2 per share, this could result in over 100 million additional shares if the program is fully executed, potentially pushing the outstanding share count above one billion.

This significant dilution could impact the stock in the near term. However, the company aims to reduce costs and achieve positive cash flow to avoid further equity offerings and manage its debt effectively.


Tilray trades at approximately 1.9 times its expected sales for the May 2025 fiscal year, a discount compared to peer Canopy Growth (CGC), which trades at nearly 4.0 times expected sales.

This valuation disparity is partly due to Canopy’s recent surge on hopes of US cannabis legalization. Street analysts have an average price target of $2.37 for Tilray, implying more than 20% upside from the current price of $1.90.

However, this target has decreased from $2.65 in the previous coverage and over $3.50 a year ago, reflecting concerns about ongoing dilution.

Investors Seek a Clearer Outlook

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Tilray has made progress in improving its balance sheet by reducing its debt and raising capital through equity sales. However, these efforts have resulted in significant dilution, posing a challenge for the stock in the near term.

The potential for US cannabis legalization remains a positive factor, but the increasing share count and need for further operational improvements are concerns. Management’s focus on cutting costs and reducing cash burn is critical to the company’s future success.

Further evaluation of Tilray’s performance and financial guidance for the May 2025 fiscal year will provide a clearer outlook in the coming months.


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