Tilray stock price has attempted to rebound this week as it rose in the last three consecutive days. It rose to a high of $1.03 in New York, up from this month’s low of $0.8740. This article explores some of the top reasons why the TLRY shares have more downside.
Tilray stock is at risk as Trump’s cannabis reclassification odds fall
The main reason why the TLRY share price surged since June was that Donald Trump announced that he was considering rescheduling cannabis into a less dangerous category. At some point, he hinted that he was about to make that decision.
However, Trump has not mentioned anything about reclassification in the past few months. And, traders now believe that it may not happen. A Kalshi poll found out that odds of this rescheduling happening this year have dived to 6% from 40% in September.
Similarly, odds of the rescheduling happening in 2026 have dropped from nearly 80% in August to 55% today.
Trump has likely remained muted on the issue after finding pushback from his fellow Republicans. Therefore, the Tilray stock price will likely remain under pressure that long this decision takes.
Read more: Here’s why the Tilray stock price has crashed and what next
Alcohol beverage growth has stalled
Tilray Brands has been diversifying its business in the past few years as the management discovered the risks of focusing on the cannabis industry.
It has diversified its business by making large acquisitions in the alcoholic beverage industry. It bought a few brands from AB inBev in 2023, and added more from Molson Coors last year.
The most recent results showed that the company’s beverage business was not having substantial growth as was previously expected. Its beverage revenue came in at $55.7 million in the last quarter from the $56 million it made in the same period last year.
Its gross margin also dropped from 41% to 38%, meaning that its profitability prospects are at risk.
A closer look at the alcoholic beverage industry shows that it is not doing well as it used to in the past as consumption growth slowly. Boston Beer shares have dived by 38% in the last 12 months, while Molson Coors have dropped by 20% in the same period.
The other parts of Tilray’s business are having mixed performance. Its cannabis net revenue rose by 5% in the last quarter to $64.5 million, while the wellness and distribution rose modestly to $15.2 million and $74 million, respectively.
Tilray stock price technicals point to more downside
TLRY stock chart | Source: TradingView
Meanwhile, the company’s technicals suggest that it has more downside to go in the coming weeks or months, barring an important announcement from the company or Trump.
The daily chart shows that the stock has crashed from the year-to-date high of $2.32 in October to $1 today.
It remains below the important level at $1.55, the highest level on August 27. It moved below all moving averages and the Supertrend indicator remains in the red.
The recent rebound is also not all that strong and is showing signs that it is a dead-cat bounce. A DCB happens when an asset in a freefall rebounds temporarily and then resumes the downtrend.
Therefore, the stock will likely continue falling, potentially to the next key support level at $0.8740, its lowest level this week. A move below that level will point to more downside.
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