Tilray Brands stock forecast: taking the rebound with a grain of salt

Tilray Brands (NASDAQ: TLRY) stock price is struggling this year. It has already plunged by more than 24% in 2024, underperforming the Nasdaq 100, Dow Jones, and S&P 500 indices that have surged to their highest level on record. Other cannabis companies like Curaleaf and Verona Pharma have also retreated.

Growth through acquisitions

Tilray Brands is one of the biggest cannabis companies in Canada. Over the years, the company has grown its business through acquisitions, a strategy that investors have not rewarded as its stock has plunged by over 99% from its all-time high.

The most recent acquisition happened in 2023 when the company bought eight beer brands from AB InBev. This buyout was intended to boost its alcoholic beverages business, which it believes will provide diversification to the risky cannabis business.

Tilray Brands also bought Truss Beverage from Molson Coors, which gave it a bigger market share in the cannabis beverage market. Other buyouts have included HEXO, Redhook, and Natura Naturals. 

These buyouts have helped the company grow its annual revenues from over $179.3 million in 2019 to over $700 million in the trailing twelve months. Its revenue in the last quarter rose by 34% to $194 million, helped by acquisitions.

However, these acquisitions have come at a cost as the company’s net loss has ballooned. Its total net loss jumped from $36.1 million in 2019 to over $1.4 billion in the TTM. 

Cannabis still plays an important role in Tilray Brands’s business but its share is shrinking. Its cannabis business brought in $67 million in revenue in the last quarter compared to the $47 million from alcoholic beverages. Its distribution net revenue rose by 12% to $67 million.

The beverages segment will continue taking a bigger share over time as the integration process continues.

Still, the cannabis segment remains a thorn in the flesh for Tilray Brands. In Canada, its home market, business has been saturated by more cannabis companies.

In the United States, the potential classification of cannabis business has faced some barriers as some FDA officials have opposed it. Most cannabis legislation has failed to move ahead because of the divided government.

Germany recently passed cannabis laws but a closer look shows that they are key barriers. Still, some analysts believe that Germany will be a key winner for Tilray’s distribution business. Tilray itself believes that it can double its German revenue in the next few years.

Tilray stock price forecast

TLRY chart by TradingView

TLRY share price has been in a strong downward trend this year as it lost about a quarter of its value. It formed a descending channel shown in red. It rose above the upper side of this channel in the pre-market session. The stock also jumped above the 50-day and 25-day moving averages.

Therefore, I believe that the gains could be limited, meaning that the stock could resume the downward trend. If this happens, the stock could drop to the important support at $1.60, its lowest point last week.

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