Tilray Brands stock price has been in a strong downward trend this year and is now sitting near its all-time low as concerns about the cannabis industry remains. It has imploded by over 48% this year, bringing its valuation to about $1 billion.
Other cannabis companies have also crashed this year. The AdvisorShares Pure US Cannabis ETF (MSOS) has crashed by over 46% this year, lowering its assets to about $480 million. Some of the other top laggards are companies like Green Thumb Industries, Truelive Cannabis, and Curaleaf Holdings.
US cannabis regulations hope fall
The main reason why Tilray Brands and other cannabis stock prices have plunged is that hopes of cannabis legislation have remained elusive.
These hopes dimmed after the last general election, in which Republicans won the White House, the House of Representatives, and the Senate.
Historically, Republicans have been relatively conservative on cannabis issues, with many of them being opposed to it. Therefore, the odds are that a cannabis bill that has been in deliberations will not see the end of the day.
The bill aimed to bring a federal regulation on cannabis in line with the Supreme Court ruling. In particular, this bill was focused on banking since most cannabis companies still don’t have access to banking services in the US. Most large banks seek to avoid issues like money laundering and drug trafficking rules.
There are also odds that the much-anticipated cannabis reclassification into a less harmful drug will not happen. This reclassification was championed by Joe Biden and other Democrats earlier this year.
To be clear: Tilray Brands does not have a large presence in the United States. Therefore, its stock has crashed because the company’s hopes of entering the lucrative market have faded as regulations have remained elusive.
Read more: Tilray Brands stock analysis: attractive risk/reward?
TLRY is not just a cannabis company
Most notably, Tilray is no longer just a pureplay cannabis company as it has entered the alcoholic beverages industry. The most recent results showed that Tilray’s beverage alcohol revenue rose by 132% to $56 million in the last quarter.
This revenue growth was because the company has made several acquisitions in the past few months. It bought several brands from AB InBev and others from Molson Coors. Its cannabis revenue was $61 million, while its distribution and wellness revenue was $68.1 million and $14.8 million.
Therefore, this diversification makes it one of the best cannabis-related companies to invest in because a slowdown in the sector will be offset by the alcohol business.
Most importantly, the company has started to narrow its losses. Its most recent results showed that its net loss was $34 million, an improvement from $55 million in the same quarter in 2023.
Tilray Brands stock price analysis
The daily chart shows that the TLRY share price has been in a strong bearish trend in the past few months. It has recently dropped below the important support level at $1.45, its lowest level on October 10.
The stock has remained below all moving averages, while the MACD indicator has moved below the zero line. The Relative Strength Index (RSI) has remained below the oversold level at 30.
Therefore, the path of the least resistance for Tilray is downwards, with the next point to watch being at $1. In the long term, however, there is a likelihood that the stock will recover as investors buy the dip and as its diversification strategy pays off. If this happens, the next target to watch will be at $1.45.
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