Tilray Brands (TLRY) stock price has bottomed: July 29 will be key

Tilray Brands (NASDAQ: TLRY) stock price will be in the spotlight this week as it publishes its second-quarter financial results. These numbers will come at a time when it is hovering near its year-to-date low of $1.60. 

Tilray, once one of the highest-flying companies in the cannabis industry, has dropped by 20% this year and by over 95% in the past five years. This crash has brought its market cap to $1.5 billion, a figure that is significantly lower than the $3.9 billion it spent to acquire Aphria in 2020.

Tilray Brands earnings ahead

Tilray Brands has mixed fundamentals over the years. Its annual revenues have risen from $179.3 million in 2019 to over $627 million in 2023. Its revenues have risen to $743 million in the trailing twelve months. 

While these are good numbers, they were mostly because of its acquisitions. Data shows that the company has made 17 acquisitions, including the likes of HEXO, MedMen, Square Mile Cider, and Blue Point Brewing. 

The company had an extremely weak bottomline, which explains why its stock has tumbled hard in the past few years. Its net loss has jumped from over $25 million in 2019 to over $1.45 billion in the last financial year.

As a result, Tilray Brands has been a highly dilutive company in the past few years, a move that has seen its outstanding shares jump from over 110 million in 2020 to 774 million today. This trend will continue as the company recently said that it would raise $250 million to buy assets in the US.

The recent regulatory steps have encouraged its entry to the US market. There are hopes that the US will reclassify cannabis into a less dangerous drug. Chuck Schumer, the majority leader in the Senate, has also supported measures to support cannabis banking in the US. 

Tilray Brands has made some progress lately. It recently received a growing license in Germany under new crypto-friendly laws. The company was also approved to introduce a third medical cannabis product in Portugal. 

Most importantly, it has moved to diversify its business by investing in alcoholic beverages. Its biggest investment in all this was its buyout of eight beer brands from AB InBev in 2023. It also acquired SweetWater Brewing and its ten brands like Widmer and Redhook. 

Tilray Brands earnings ahead

The next big catalyst for the Tilray Brands stock price will be its earnings on Monday. Analysts expect its results to show that its revenue rose to $227 million in the last quarter, up from $184 million in the same period a year earlier.

For the year, analysts expect that the company’s revenue will be $783 million, up from $627 million a year earlier. However, it is worth noting that Tilray has missed analysts' estimates for four consecutive quarters. 

Investors will watch its headline revenue and profitability metrics in this report. Also, they will focus on its alcoholic beverage business and whether it is offsetting its volatile cannabis segment. 

The most recent financial results showed that its total revenue rose by 30% in its third quarter. Its alcohol business brought in $54.7 million, a 165% increase from the previous year. This growth was because of the brands it acquired from AB InBev. 

Therefore, since its cannabis revenue stood at $63.4 million, we can see that the company is becoming a more diversified brand. The other revenue figures came in from its distribution and wellness businesses, which brought in $56.8 million and $13.4 million, respectively.

Analysts have a mild opinion about Tilray Brands. Only analysts from Zuaniac and CIBC have delivered their estimates this year. The average stock target is $2.38, higher than the current $1.90.

I believe that Tilray Brands’ has attractive risk-reward metrics. While the stock could still drop, there are chances that it could bounce back as well, as the technicals below will show.

Tilray Brands stock price analysis

The daily chart shows that the TLRY share price has been under intense pressure for a while. It has found a strong support around the $1.50 level, where it has failed to move below since July last year. This price action is a sign that bears are struggling to move below that support point. 

It has also formed a double-bottom pattern with a neckline of $2.96. In most cases, this is one of the most bullish patterns in the market. The stock is also consolidating at the 50-day and 25-day Exponential Moving Averages (EMA). 

Therefore, I believe that the Tilray stock price will bounce back as buyers target the key resistance point at $2.96, which is about 64% above the current level. The alternative scenario is where it loses the support at $1.50. If this happens, the next point to watch will be at $1.