Tilray stock forms a risky pattern: Jan. 8 will be key

Tilray stock price has been highly volatile in the past few months as investors focused on Donald Trump’s cannabis reclassification efforts and its implications. It surged from $3.59 in June to a high of $23.16 in October. 

The stock then tumbled by 70% to $6.85 in December, then popped to $15.68 in the same month. It was trading at $9.50 on Monday this week, with its short interest rising to 16.8%.

Cannabis rescheduling could have a short-term boost to Tilray shares

Tilray Brands stock price will be in the spotlight this month as investors continue focusing on the reclassification. A recent report by The Marijuana Herald noted that Trump had directed Attorney General Pam Bondi to issue the final ruling by the end of this month. 

If the Department of Justice (DoJ) follows through this, it means that marijuana could be reclassified by this spring. If this happens, companies in the industry will remove some punitive taxes. It may also push legislators to consider a banking bill that has stalled in the Senate for years.

Tilray Brands, one of the biggest cannabis stocks does not have a big presence in the United States. Therefore, the company stands to benefit from relaxed rules as it has always hinted its ambition to enter the country.

The US is a major country in the cannabis industry, with estimates showing that it has a total addressable market (TAM) of over $42 bilion. However, entering the US will not be easy as competition is rife with companies like Curaleaf, Cresco Labs, Trulieve Cannabis, and Greem Thumb Industries.

The steady competition may limit the company’s growth and the stock performance after the reclassification works. At the same time, there is a risk that investors may sell the news once the process ends.

TLRY earnings ahead

Tilray stock price will be in the spotlight this week as the company publishes its financial results on January 9. The options market is pricing more downside, with puts being more than calls.

The most recent results showed that Tilray Brands’ revenue rose by 5% to $209 million in the first quarter of its fiscal year. This growth, which was better than expected, was mostly driven by its cannabis segment whose revenue rose by 5% to $64.5 billion. 

However, the company’s beverage business, which the company has invested in heavily, remained under pressure. The revenue dropped to $55.7 million, down from the previous $56 million. 

Analysts believe that this week’s revenue will come in at $211 million, flat from the same period last year. They also expect the annual revenue will be $863 million, up by 5.13% from a year earlier.

Tilray stock price technical analysis 

The daily chart shows that the TLRY stock price has crashed from a high of $23 to the current $9.50. It has remained below all moving averages, a sign that bears are in control.

Tilray has also formed a head-and-shoulders pattern, a common bearish reversal signs. Therefore, the options market and the pattern will likely remain under pressure, potentially to a low of $6.95, its lowest level in December.

A break below that level will point to more downside, potentially to last year’s low of $3.60.