Tilray Brands (NASDAQ: TLRY) has been one of the worst-performing cannabis stocks this year, with shares down roughly 55% since January and 62% over the past 12 months. The stock recently traded around $4.15, well off its 52-week high. Despite the steep decline, some contrarian investors see a potential opportunity, pointing to the company's improving fundamentals and a possible technical rebound.
Revenue growth continues despite industry headwinds
The cannabis sector has faced a challenging environment, with softening demand, intensifying competition, and delays in federal rescheduling in the U.S. However, Tilray's latest earnings show resilience. For the fiscal year, revenue rose 11% to $915 million, with a 25% jump in the fourth quarter to $281 million, driven largely by acquisitions.
Segment performance was mixed but generally positive. Cannabis revenue increased 5% to $71.5 million, with gross margins holding steady at 44%. The beverage business was a standout, generating $105 million in revenue, up sharply from $65.6 million a year earlier. Distribution revenue grew 15% to $85 million, while wellness revenue rose 16% to $19.7 million. The company also narrowed its quarterly loss, reporting a non-cash loss of $37.9 million, primarily due to non-cash charges.
Analyst expectations and potential catalysts
Wall Street remains cautiously optimistic. The average analyst estimate projects fiscal 2026 revenue of $1.12 billion, a 22% increase, with further growth to $1.18 billion the following year. Historically, Tilray has tended to beat top-line estimates, which could provide upside.
A key catalyst is the potential rescheduling of cannabis in the U.S. Although Tilray currently has no U.S. cannabis operations, the company has stated it is evaluating pathways to enter a federally compliant medical cannabis market once rescheduling is finalized. This could open a significant new revenue stream.
Investors have also been watching related developments, such as Curaleaf's hostile bid for Aurora Cannabis, which could reshape the competitive landscape. Additionally, Tilray's stock recently hit a 52-week low, prompting some to assess the dip-buying opportunity.
Technical analysis: potential rebound ahead
From a technical standpoint, TLRY has been in a persistent downtrend, forming a descending channel and trading below all major moving averages. However, the stock is now hovering near a key support level at $3.69, which is part of a potential double-bottom pattern with a neckline at $4.95. If the support holds, a bounce toward $4.95 is possible, with further upside to $5.00 if that level is breached. The bullish scenario would be invalidated if the stock falls below $3.70.
While the technical setup suggests a possible near-term rebound, the fundamental picture remains mixed. The company's revenue growth is encouraging, but profitability is still elusive, and the cannabis industry's regulatory environment remains uncertain. Investors should weigh these factors carefully.
For context, other beaten-down stocks have shown similar patterns, such as Pinterest's 60% decline and Trade Desk's 90% plunge, where the question of value versus falling knife is central.
This article is for informational purposes only and does not constitute financial advice.
