Tilray Brands stock price has gone vertical this week, joining other cannabis companies like Canopy Growth, Curaleaf, and Truelive. TLRY surged to a high of $1.06, its highest level since February, and up by 200% from its lowest point this year.
Why the Tilray Brands stock is soaring
The TLRY stock price is in a strong uptrend this week as the cannabis industry appears to have an unlikely ally in Donald Trump after spending millions of dollars in lobbying.
Trump is considering reclassifying of marijuana at the federal level, a move that would move it to a less dangerous category. This aligns with the efforts of the Joe Biden administration through the DEA.
In a statement, Trump said that he would decide in the coming weeks. He cited the good things he has heard about medical marijuana and the bad ones he has seen over the years.
A move to reclassify cannabis would have a major impact in the industry and the Tilray stock price. For one, it would make it easier for these companies to do business across state lines. Most importantly, it would enable them to bank in major national companies.
Reclassification and more friendly regulations would be highly bullish for Tilray Brands because its cannabis business does not have a presence in the United States. The company has insisted that it will only do business in the country when there are friendly regulations.
Risks for cannabis stocks
Still, there is a risk that these stocks could crash soon as they have done in the past when there was optimism about reclassification. For example, most cannabis stocks jumped after Joe Biden launched his reclassification efforts and then crashed as the process dragged.
Similarly, they all soared after Senate Majority Leader talked of the cannabis banking bill that he was pushing. Eventually, he decided not to table it because Democrats did not have a majority.
The other risk is that Trump has not made his decision yet and he is known to change his views based on who he talks to last. As such, it is not a done deal that he will support the reclassification.
Most importantly, Trump will likely listen to right-wing commentators, many of whom oppose the move. For example, top popular figures like Charlie Kirk and Tucker Carlson have opposed such moves in the past.
I hope this doesn’t happen. We need to protect public spaces for kids. Everything already smells like weed, which is ridiculous. Let’s make it harder to ruin public spaces, not easier.
Trump will also listen to the Christian right, who have always opposed laws that make cannabis more available.
Most importantly, it is still uncertain whether Trump’s move to reclassify cannabis will boost Tilray’s business in the long term, even with a potential entry into the United States.
The most recent results showed that Tilray’s business continued to deteriorate in the fourth quarter. Its revenue stood at $224.5 million, down from $229 million in the same period last year.
The decline was partly because the company decided to pause the vape and infused pre-roll categories.
Most importantly, the company’s beverage segment, which it hopes will help to offset the cannabis segment, dropped to $65 million from $76.7 million in the same period last year. The company reported a whopping net loss of over $1.2 billion.
Tilray stock price technical analysis
TLRY stock chart | Source: TradingView
The daily chart shows that the ongoing Tilray Brands stock price has surged hard in the past few days. This rebound was in line with our expectations, as we noted here. It was forming a rounded bottom before that rebound happened.
TLRY has also moved above the 50-day and 200-day moving averages, which is a bullish aspect. Therefore, the stock price will likely continue rising as bulls target the key resistance at $1.50. These gains will likely be short-lived as the above risks materialize.
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