We started our Zombie Stock list in June 2022 and have added a total of 33 stocks to the list. Post this report, 21 stocks remain on the list. See the end of this report for performance details on all of the Zombie Stocks.
Tilray Brands (TLRY) – Closing Short Position: down 92% vs. S&P up 103%
We first put Tilray Brands (TLRY: $2/share) in the Danger Zone on July 16, 2018 and added it to our Zombie Stock list on September 8, 2022. Our thesis highlighted Tilray’s misleading GAAP earnings, soaring expenses, falling economic earnings, negative FCF, and overvalued stock price.
In the five plus years since we published our original Danger Zone report, TLRY outperformed as a short by 196%, falling 92% compared to a 103% gain for the S&P 500. In the past year alone, TLRY is down 30%.
Tilray’s fundamentals continue to look weak. The company generates a -2% ROIC over the TTM. The company’s NOPAT margin is down from -11% in 2020 to -13% in the TTM and its invested capital turns fell from 0.3 to 0.1 over the same time. Additionally, TLRY has a market implied GAP of over 100 years in the default scenario in our dynamic reverse DCF model and an economic book value of -$1.56/share. In other words, TLRY is likely not worth $0/share.
Today, Tilray still meets the requirements of a Zombie Stock, and has 17 months before it runs out of cash at its current cash burn rate. However, with the stock now below $2, we’re taking it off the Zombie Stock List. We’re taking the 196% outperformance as a short, and 90% outperformance as a short since naming it a Zombie Stock, as a win. Lastly, the lower valuation increases stupid money risk. As a result, we believe it’s time to close this successful Danger Zone and Zombie Stock pick.
Figure 1: Danger Zone: TLRY vs. S&P 500 Price Return Since July 2018
Sources: New Constructs, LLC and company filings
Note: Gain/Decline performance analysis excludes transaction costs and dividends.
The Full Zombie Stock List
After removing Tilray, 21 stocks remain on the Zombie Stock list.
Figure 2 shows all 33 Zombie Stocks. We mark those that have been removed from the list with an asterisk.
Figure 2: Zombie Stock Reports: Performance Since Publish Date Through 9/20/24
| Company Name | Ticker | Date Added | Return Since Add Date | Return as Short Vs. S&P 500 |
| Freshpet Inc.* | FRPT | 6/23/22 | -16% | 9% |
| Peloton Interactive | PTON | 6/23/22 | -56% | 102% |
| Carvana Co. | CVNA | 6/23/22 | 450% | -404% |
| Snap Inc. | SNAP | 7/22/22 | 1% | 43% |
| Beyond Meat, Inc. | BYND | 8/1/22 | -60% | 100% |
| Rivian Automotive* | RIVN | 8/8/22 | -61% | 94% |
| DoorDash, Inc. | DASH | 8/10/22 | 79% | -43% |
| Shake Shack, Inc. | SHAK | 8/10/22 | 104% | -68% |
| AMC Entertainment | AMC | 8/15/22 | -98% | 131% |
| GameStop Corporation* | GME | 8/15/22 | -68% | 69% |
| Chewy Inc.* | CHWY | 8/17/22 | -55% | 57% |
| Uber Technologies | UBER | 8/17/22 | 146% | -113% |
| Robinhood Markets | HOOD | 8/22/22 | 150% | -111% |
| Tilray Brands* | TLRY | 9/7/22 | -45% | 77% |
| Affirm | AFRM | 9/19/22 | 103% | -55% |
| Sunrun | RUN | 9/21/22 | -40% | 94% |
| Blue Apron * | APRN | 9/26/22 | -79% | 95% |
| RingCentral | RNG | 10/3/22 | -29% | 80% |
| Allbirds Inc.* | BIRD | 10/17/22 | -71% | 89% |
| Wayfair | W | 11/14/22 | 25% | 18% |
| Atlassian* | TEAM | 11/16/22 | 43% | -32% |
| Bill.com | BILL | 11/16/22 | -55% | 100% |
| Okta | OKTA | 11/16/22 | 55% | -10% |
| Oatly* | OTLY | 11/21/22 | -62% | 71% |
| Twilio | TWLO | 11/23/22 | 30% | 12% |
| Ceridian* | CDAY | 11/23/22 | -3% | 11% |
| Redfin | RDFN | 11/30/22 | 134% | -94% |
| Five9 Inc.* | FIVN | 12/5/22 | -37% | 72% |
| Opendoor | OPEN | 1/30/23 | -7% | 47% |
| Compass Inc. | COMP | 2/6/23 | 46% | -9% |
| Sweetgreen Inc. | SG | 3/13/23 | 413% | -367% |
| Lucid Group* | LCID | 4/10/23 | -23% | 31% |
| Trupanion | TRUP | 5/1/23 | 22% | 17% |
| Overall Portfolio Return | -15% | 61% | ||
Sources: New Constructs, LLC and company filings.
*Stocks removed from the Zombie Stock List. Performance tracked through the date each was removed. Linked report goes to the report in which the stock was removed.
Since our first report on June 23, 2022, the Zombie Stocks have fallen 15% while the S&P 500 is up 46%. See Figure 3.
Figure 3: Combined Performance of Zombie Stocks List Through 9/20/24
Sources: New Constructs, LLC and company filings.
This article was originally published on September 23, 2024.
Disclosure: David Trainer, Kyle Guske II, and Hakan Salt receive no compensation to write about any specific stock, style, or theme.
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