Wednesday isn’t a good day for the cannabis markets as stocks are mostly lower after the Dow frowns even more over unclear future of the Sino-American trade talks that weighs down the broader market and market leader, Tilray shares suffered following disappointing earnings.
The Dow Jones Industrial Average DJIA, -2.54% was down more than 500 points at last check, after the U.S. 2-year Treasury note yield traded above the 10-year note yield for the first time in more than a decade. This has caused many analysts and spectators to fear for another recession that is brewing. An inverted yield curve is when it is much more expensive to borrow in the short term than the long term and could possibly indicate a recession.
“The equity market is on borrowed time after the yield curve inverts,” strategists at B. of A. Merrill Lynch wrote in a note to clients this week.
Notably, the weak performance of the broader market has also dragged the cannabis market down especially Tilray, where stocks plummet after disclosing disappointing losses.
Tilray shares TLRY, -12.76% fell more than 12% after the company posted wider-than-expected quarterly losses. The disclosed number by the company outweighed better-than-expected revenue, failing to solicit support even from the most bullish analysts as they respond to the numbers.
In the second quarter of 2019, Tilray, which trades in NASDAQ, has seen a net loss of $35.1 million, or 36 cents a share, versus losses of $12 million, or 17 cents a share, in the year-ago period. Revenue including excise taxes rose to $45.9 million from $9.7 million in the year-ago period. After excise tax of $3.9 million, Tilray reported revenue of $42 million.
“We expect Tilray to remain in investment mode to drive growth and do not expect positive earnings in near-term,” Piper Jaffray analyst Michael Lavery wrote in a note to clients.
Meanwhile, the Horizons Marijuana Life Sciences ETF HMMJ, -5.90% was down 4.8%, with 48 of its 54 constituent stocks losing ground. The ETFMG Alternative Harvest ETFMJ, -5.67% was down 4.7%, with all 32 of its constituent stocks falling.