Canopy Growth vs Tilray: How Do They Compete?

The cannabis energy has been growing at a rapid clip, and investor enthusiasm has been high. This, in spite of the fact that cannabis south african private limited companies are largely untested, there remain significant legal thresholds and barriers in the U.S., and the industry itself is changing dramatically. Noiseless, analysts have focused on a small number of companies which seem poised to assert their dominance beyond the competition. Among these are Canopy Growth Corp. (CGC) and Tilray (TLRY). On the surface, these companies share much in familiar. Both of them are based in Canada, where recreational marijuana use was legalized in October. Both have also attained headlines for their aggressive expansion practices and their ambitious plans going forward. But how exactly do they rage up against one another in a direct comparison?

Both Canopy Growth and Tilray have decided big gains to their share prices and total market capitalizations this year. As of December 7, 2018, Canopy had perceived its shares climb by close to 25% year-to-date, while it’s market cap increased by close to 110%. By contrast, Tilray’s serving price and market cap have both more than tripled year-to-date.

Why the dramatic difference? Simply put, Canopy Progress increased its shares outstanding by just under 68% during 2018, while Tilray bumped its shares first-class by less than 2%. This helps to explain why Tilray saw its market cap and share gains move almost in lockstep, while Canopy’s physiques were widely separated from one another.

Canopy issued a substantial number of new splits over the course of 2018. The reason for this was an effort to raise cash in order to continue to fund expansion strains. Tilray, by contrast, launched its IPO in July, providing it a large influx of cash with which it could accomplish its own objectives.

In both cases, Canopy and Tilray moved to expand aggressively in 2018. Canopy began the year with a CAD$175 million bought-deal commerce transaction. Canopy bought up several companies in 2018, including Manitoba-based cannabis company Hiku Brands and Colorado-based examination outfit ebbu. Canopy Growth has also rapidly developed its production capacity; as of mid-November, the company boasted 4.3 million clean feet of licensed production capacity. Perhaps the best thing for Canopy, though, is the fact that beer monster Constellation Brands (STZ) bought up $4 billion worth of the company, a purchase of more than 104 million dues of common stock. This puts Canopy in an exceptional position in terms of cash to use to finance continued development, probing and expansion heading forward.

While many cannabis companies have gobbled up stretch to develop cultivation facilities, Tilray’s approach has been different. The company has seen its market cap rise dramatically, however it doesn’t focus on cultivation to the same degree that many of its competitors do. While this may seem counterintuitive, it could accord Tilray an edge over the long term. If marijuana production becomes a low-margin and low-cost business, major canada entrepreneurs could find themselves in a race to the bottom in order to survive. Tilray, on the other hand, could position itself to buy, more readily than grow, its supply. The company has recently made inroads into the Latin American market through its property of Alef Biotechnology, and it continues to focus its efforts on medical marijuana studies and research.

On the other hand, heading into the end of 2018, Tilray has seen its reserve price decline along with negative earnings estimate revisions, per Nasdaq. Whether this is a short-term downside risk or a lexigram of things to come, though remains to be seen.