TLRY has an ugly history of post-earnings moves to the downside
When we last checked in with Tilray, Inc. (NASDAQ:TLRY), the cannabis stock was trudging lower on the charts despite its expanding business profile. It's been more of the same for TLRY in the last month, with that channel of lower highs still being carved out. Only now there's additional chart pressure from the shares' descending 30-day moving average.
It could get particularly dicey for Tilray as earnings loom. The cannabis company will report earnings before the market opens on Thursday, Oct. 7. Besides a 25.8% post-earnings bull gap in July, seven of the last eight reports have yielded negative post-earnings moves.
There's plenty of pessimism to be unwound. Of the 15 brokerages covering TLRY, 11 maintain a tepid "hold" stance. And while short interest has fallen by 10% in the two most recent reporting periods, the 33.02 million shares sold short accounts for a healthy 7.7% of the stock's total available float.
Fundamentally, Tilray stock is extremely overvalued despite the cannabis company’s strong growth rate. TLRY's revenues are up a jaw-dropping 1692% since fiscal 2018 . However, Tilray stock has yet to reach a positive figure for annual earnings and TLRY has an insanely high forward price-earnings ratio of 1250.00. Furthermore, TLRY's net income has decreased by nearly $400 million since fiscal 2018. Overall, Tilray stock's price has outgrown the cannabis company’s performance and may not be suited for investors with an outlook of under five years.
As it was a month ago, now seems like a great time to weigh in on the stock's next move with options thanks to affordably priced premiums. This is per TLRY's Schaeffer’s Volatility Index (SVI) of 80%, which sits higher than just 4% of readings from the past 12 months. Plus, its Schaeffer's Volatility Scorecard (SVS) stands at 78 out of 100, indicating the equity has exceeded options traders' volatility expectations over the past year -- a boon for buyers.