Tilray Stock Plunges 18% on Share Offering, Wiping Out Earnings Gains
The cannabis firm's surprise Q1 profit was quickly overshadowed by investor concerns over shareholder dilution from a new capital raise.
Shares of Tilray Brands (TLRY) experienced a dramatic reversal, plunging over 18% after the company announced a new share offering. The sharp decline completely erased strong initial gains that followed a surprise first-quarter profit, highlighting investor anxiety over potential shareholder dilution.
The volatile trading session began on a high note, with Tilray's stock surging more than 20% in early trading. The optimism was fueled by a stronger-than-expected earnings report for the first quarter of fiscal year 2026, where the company posted a net income of $1.5 million. This result of a loss and marked a significant improvement in performance.
However, the positive sentiment was short-lived. Shortly after the earnings release, Tilray filed to sell shares to raise approximately $51.6 million. The move sparked immediate concern among investors about the dilutive impact on existing shares. The offering could introduce nearly 29 million new shares, representing a potential dilution of around 19% for current stockholders, a prospect that sent the share price tumbling.
This capital raise overshadowed the operational progress reported in the quarter, which included record revenue and an adjusted EBITDA that doubled analyst forecasts. Management attributed the strong results to the successful integration of recent beverage acquisitions and disciplined cost controls.
Despite the quarterly beat, the decision to raise capital has put a spotlight on the company's underlying financial position. Analysts note that Tilray's , with metrics indicating potential bankruptcy risk and inconsistent profitability. The stock offering, viewed by some as a necessary step to shore up its balance sheet, ultimately proved to be a more powerful catalyst for investors than the unexpected quarterly profit. The episode underscores the precarious balance Tilray must strike between funding its growth and maintaining shareholder value.