Slashing Tilray’s FVE as Canadian Market Growing More Slowly Than We Expected in Fiscal Q2

We’ve lowered our fair value estimate for Tilray to $8 and CAD 10, from $12 and CAD 16, respectively, following slower growth in the Canadian market than we expected during its fiscal second quarter. Net revenue growth declined 6% sequentially and 7% year on year primarily from cannabis. Even excluding currency headwinds, net revenue still declined 5% sequentially and grew just 2% year on year. Also, fierce competition in the crowded Canadian market continues to weigh on prices, also contributing to top-line headwinds. Despite cost initiatives, adjusted EBITDA decreased 13% sequentially and 15% year on year to about $11.7 million. Despite our cut, no-moat Tilray’s shares remain undervalued and well-positioned in the challenging Canadian market.