Tilray Brands stock price has imploded and currently trades at a record low as concerns about its cannabis business remain. TLRY was trading at $0.65 on Thursday, bringing its market cap to $589 million. This means that it has had a $24.5 billion wipeout as its market cap crashed from over $25 billion to $590 million today.
Why Tilray Brands stock price has crashed
There are three main reasons why Tilray Brands stock price has imploded. First, the decline aligns with most other cannabis stocks, which have all crashed from their all-time high.
As you recall, these stocks surged a few years ago after the US Supreme Court ruling that left the question of cannabis legalization to states. Most American states then voted to allow cannabis, leading many investors to predict that the business would boom.
The bright expectations about the future of cannabis and the demand forecast has not come to pass. Regulations in the US have not been uniform, with many companies in the country facing major challenges. For example, many American banks still reject cannabis companies.
Therefore, most cannabis stocks have crashed, with the closely-watched AdvisorShares Trust AdvisorShares Pure US Cannabis (MSOS) ETF having plunged to $2.5, down by 95% from its highest point on record.
Second, Tilray Brands stock price has crashed because the company has struggled with profitability. The most recent annual results showed that the company made a net loss of over $245 million. A quarterly report it released in January showed that its net loss rose to $85 million from $46 million a year earlier.
Third, the company has expanded to the alcoholic beverage industry. While this diversification is a good, the reality is that the alcoholic market is slowing, which may hurt the company’s growth over time.
Read more: Tilray Brands stock price has crashed: time to buy the dip?
TLRY financial performance
The most recent results showed that Tilray Brands revenue rose by 9% in the second quarter to $210.9 million. Its half-year revenue rose by 11% to $370 million.
Its beverage revenue rose 36% to $63 million, with its gross margin being 40%. The cannabis business made $66 million, while the distribution and wellness businesses made $68 million and $15 million, respectively.
These numbers showed that the company’s diversification was working out well. In this, a slowdown in the cannabis business would be offset by the alcoholic beverage business.
Analysts anticipate that Tilray Brands revenue for the current quarter will be $274 million, while its annual revenue will move to $893 million. It will then make $943 million in the next financial year.
Read more: Tilray stock price crashes below $1: buy the dip or sell the rip?
Tilray Brands stock price analysis
The daily chart shows that the TLRY share price has been in a strong downtrend in the past few months. It crashed to a low of $0.6552, a record low.
Most recently, the stock has moved below the crucial support at $1.15, its lowest swing on December 20. It has moved below the 50-day and 100-day Exponential Moving Averages (EMA).
The Relative Strength Index (RSI) has drifted upwards, while the MACD indicator has moved below the zero line. Further, the stock has moved to the oversold level of the Murrey Math Lines tool.
Therefore, the Tilray Brands share price will likely continue falling as sellers target the key support at $0.50.
More downside will be invalidated if the stock rises above the key resistance level at $1.14, which will invalidate the bullish outlook.
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