The Tilray stock price has risen in the past few days, a trend that accelerated this week. It jumped to a high of $8, up by over 30% from its lowest level this year. This rally may continue in the near term amid the ongoing reclassification talk.
Tilray stock jumps amid reclassification talk
The main reason why Tilray Brands and other cannabis stocks jumped is because of the ongoing talk on reclassification. According to media reports, the Trump administration is considering reclassifying it into a less dangerous drug.
In a note on Wednesday, Axios said that the order may come as soon as today. This move is set to make it easier to study the medicinal applications of marijuana.
The reclassification would not legalize marijuana federally. However, it would make it a bit easier for companies in the industry to do business in the US.
While most states have legalized marijuana, barriers still exist as the federal government has not legalized it. One of the main challenges is that these companies find it hard to access banking services. A reclassification will likely change this.
A potential reclassification will be good for Tilray Brands, a company that does not sell cannabis in the US. The company has said that it will only enter the country once friendly regulations are implemented.
The most recent results showed that its cannabis revenue rose by 19% to $64.8 million. This growth was driven by its international business, acquisition, and its strong market share in Canada.
Tilray has been diversifying its business in the past few years. Its main priority has been in the alcoholic beverages industry. It has acquired several brands in this period, including Brewdog, the biggest craft beer brand in the UK. It also announced a major partnership deal with Carlsberg.
However, despite these efforts, its beverage revenue continues to struggle. It made $43 million in the last quarter, down by $56 million in the same quarter a year earlier.
The company also improved its profitability, with the net loss improving by 97% to over $2.4 million. It aims that itts Project 420 will make it more profitable by cutting costs.
Tilray Brands stock price chart analysis
TLRY stock chart | Source: TradingView
The daily chart shows that the TLRY stock has rebounded to $8, its highest level since February 25. This rebound is in line with our recent prediction in which we cited its technicals, including the forming falling wedge pattern.
The stock has now moved above the upper side of the wedge pattern. It also jumped above the 50-day moving average, a sign that bulls remain in control.
Therefore, the stock will likely continue rising as bulls target the resistance at $10. Still, these gains will likely be limited, meaning that the stock will then retreat after the reclassification happens. This retreat will happen as investors embrace the new normal.
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