Tilray Brands Inc. shares fell 13% to $2.56 on Nasdaq Monday after Kerrisdale Capital revealed in a report that it is short the company’s stock, describing it as a "failing cannabis player."
Kerrisdale also stated that Tilray is running a "familiar playbook for unsuccessful businesses trading in the public markets."
"Given structurally unprofitable operations, the company has resorted to ongoing, shameless and massive dilution to stay alive, even as management compensates itself generously while operating metrics further deteriorate," Kerrisdale analysts wrote.
Kerrisdale alleges that Tilray is obscuring losses by issuing shares instead of recording cash expenses to one of its largest suppliers.
They concluded by writing that the company's valuation made little sense even before retail investors bid up cannabis stocks on potential marijuana rescheduling, "which may be a boon for US weed companies but does next to nothing for Tilray."
Shares of Tilray Brands have fallen 9% year to date.
Contact Sean at sean@proactiveinvestors.com