Investing in Tilray (TLRY 8.42%) 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.
How to buy Tilray stock
How to buy Tilray stock
Step 1: Open a brokerage accountYou’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 budgetIt’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 researchIt’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 orderThe 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 in Tilray?
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 Canadian cannabis market continues to face significant headwinds. Supply exceeds demand, which has caused prices to fall. 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 0.59%) 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 -0.38%).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, could legalize adult-use marijuana in 2024. 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. with a 5% market share.
Is it profitable?
Is Tilray profitable?
Tilray isn’t profitable at this point. However, the company’s bottom line is improving. Tilray is also already generating positive and rapidly growing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- an important prerequisite for achieving profitability.
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.
ETFs with exposure
ETFs with exposure to Tilray
More than 20 exchange-traded funds (ETFs) currently hold positions in Tilray. They include:
- Amplify Seymour Cannabis ETF (CNBS 4.49%)
- AXS Cannabis ETF (THCX 3.62%)
- Cambria Cannabis ETF (TOKE 1.58%)
- ETFMG Alternative Harvest ETF (MJ 4.35%)
- Global X Cannabis ETF (POTX 5.62%)
It isn’t just marijuana ETFs that own shares of Tilray, however. Other ETFs with positions in the stock include:
Will the stock split?
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.