TLRY - Down 99% from ATH is Tilray Brands (TLRY) stock a bargain?
2023-12-13 08:32:38 ET
Tilray Brands (NASDAQ: TLRY) stock price has gone nowhere since October as concerns about cannabis companies remain. The stock was trading at $1.80 on Wednesday, where it has been stuck since October this year. It has crashed by over 65% from its highest point in 2023 and by over 99% from its all-time high.
Tilray’s business is more broad now
Tilray Brands is one of the biggest companies in the cannabis industry. Over the years, its market cap has retreated from a peak of over $19 billion to $1.3 billion today. This stock depreciation has happened even after the company’s total revenue jumped from over $179.3 million in May 2019 to over $650 million in the TTM.
Tilray Brands has grown organically and through acquisitions. Some of the most notable acquisitions were Natura Natural Holdings, Manitoba Harvest, MedMen, and Hexo. It also merged with Aphria in 2021 and recently, it acquired several beer brands from AB InBev.
Tilray has spent over $1 billion through acquisitions. These buyouts have helped to create a diversified company in industries like medical cannabis, adult cannabis, hemp-based foods, and alcoholic beverages.
The challenge for Tilray is that these acquisitions have resulted in a cash incinerator that has accumulated substantial losses. According to SeekingAlpha, its total loss has jumped from $25 million in 2019 to over $1.45 billion in the past twelve months.
As a result, Tilray has also diluted its shareholders by issuing new shares. In November, its shareholders voted to authorize increasing outstanding shares from 990 million to 1.2 billion. This is notable since the company had 76.4 million shares in 2018.
While investors have been burnt, management has been adequately compensated. For example, the CEO, Irwin Simon, earned $15 million in 2023. In comparison, Jamie Dimon, the CEO of JP Morgan, made $34.5 million in 2023 even though the company made billions in profits.
The outlook for Tilray Brands is quite uncertain now that the cannabis industry is slowing and regulatory challenges remain. This is notable since its cannabis segment represents over 40% of its total revenue. The hope is that the alcoholic beverage will continue growing as the management expects. The hope is that the segment will generate over $300 million this year.
Tilray Brands stock price forecast
The daily chart shows that the TLRY stock price has been under pressure in the past few months. It has remained below the 50-day and 100-day Exponential Moving Averages. The stock has formed a bearish flag pattern, one of the most worrying signs. Further, the Relative Strength Index (RSI) has moved from the key point at 65 to below 50. The MACD has also drifted downwards. Therefore, the outlook for the stock is bearish, with the next point to watch being at $1.62, the lowest point on November 10th. This price is about 10% below the current point and is in line with my last forecast .
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