Tilray stock price forecast: TLRY could crash by ~25% soon

By:
on Oct 12, 2023
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  • Tilray Brands share price has crashed hard from its September high.
  • The company published uninspiring financial results in October.
  • Technicals point to more downside in the near term.

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Tilray (NASDAQ: TLRY) stock price has erased most of the gains it made in September as hopes of regulatory clarity rose. After surging to $3.40 on September 5th, the cannabis stock has plunged by ~41% and is now at its lowest level since July 27th.

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Short interest soaring

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Tilray Brands has had a major fall from grace. The stock has crashed from its all-time high of $300 to ~2. Other popular cannabis stocks like Curaleaf, Cresco Labs, Green Thumb Industries, and Scotts Miracle-Gro have also plunged.

Tilray Brands provides the best example of how hype investing can go horribly wrong to investors. We have also seen this situation in EV stocks like Mullen Automotive, Canoo, and VinFast.

Similarly, many clean energy stocks that surged a few years ago like Sunrun, Enphase Energy, and First Solar have all come back to earth. I believe that many hyped AI stocks like C3.ai will also plunge in the long term, as I wrote here.

Tilray Brands stock price has crashed because of the company’s slow growth, lack of major regulatory clarity in the United States, and elevated losses. While its revenue jumped to $627 million in the last fiscal year, its loss jumped to over $1.4 billion. 

The loss-making streak continued in the last quarter. Its results showed that net revenue rose by 15% YoY to $177 million. For a loss-making ‘growth’ company, it is always important to show a higher growth rate than this. 

Adjusted gross margins dropped to 28% while the company’s net loss narrow to $56 million. Adjusted EBITDA retreated to $11.4 million. Tilray hopes to continue growing its Canada’s market share and in the US.

Also, the management hopes to propel the company into a leading player in the alcohol business. They recently acquired several brands from AB InBev. It is also investing in its craft beverage business.

The concern among investors is that Tilray will need to raise additional capital as its loss-making streak continues. It has already hiked its share count from 460 million in 2021 to over 730 million. This explains why the short interest has jumped to the highest level on record.

Tilray stock price forecast

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Tilray stock

The daily chart shows that the TLRY share price formed a double-top pattern in September. In technical analysis, this is one of the most popular bearish patterns. It has now moved below the neckline of this pattern at $2.24. The stock has also crashed below the 50-day moving average while the Relative Strength Index (RSI) is nearing the oversold level.

Therefore, the outlook for the stock is bearish, with the next level to watch being at $1.50, which is ~25% below the current level.

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