Why Bottom-Fishing Tilray Stock Is a Risky Bet
Tilray (NASDAQ:TLRY) stock could rise or fall in 2023, based on whether American legislators make progress with pro-cannabis bills.
While TLRY is a Canadian company, it sells cannabis-related products throughout North America. Thus, U.S. marijuana laws are highly relevant to Tilray and its stakeholders. So far, this looks like a steep uphill battle, and that’s bad news for Tilray.
If any company provides a lesson about what can happen when traders buy stocks during a peak hype phase, it’s Tilray. Shares of Tilray have lost value for several consecutive years as the cannabis trade petered out.
Going on a bottom-fishing expedition now would be a highly risky bet. Investing in Tilray wouldn’t make sense without a huge, positive catalyst.
Could the U.S. government provide such a catalyst? The odds aren’t favorable, so caution is the best attitude even if you’re an eager pro-cannabis advocate.
What’s Happening with TLRY Stock?
It’s been years since Canada made cannabis products fully legal for adults. The so-called Cannabis 2.0 trend, which involved the sale of vapes, oils, edibles and so on, was a huge disappointment.
So, without any new, exciting reasons to buy TLRY stock, many investors simply threw in the towel. Believe it or not, Tilray shares have lost roughly 98% of their value since early October of 2018.
If the trend is your friend, there’s nothing particularly friendly about this stock.
What could spur a turnaround for Tilray and its investors? That’s a tough question to answer, as the company carries a sizable long-term debt burden and has been unprofitable most of the time during the past few years.
U.S. Legalization Won’t Happen Soon
Maybe you’re considering owning TLRY stock because you’re counting on federal-level U.S. marijuana legalization law passing sometime in the near future. This would certainly give Tilray shares a boost, but it’s unlikely to occur anytime soon.
Back in March of 2021, the Secure and Fair Enforcement (SAFE) Banking Act was introduced in Congress. This bill would have made it easier, from a legal standpoint, for banks to loan money to cannabis-focused businesses.
The last chance for the SAFE Banking Act to pass in 2022 evaporated when members of Congress excluded the bill from a spending package. Moreover, Senate Minority Leader Mitch McConnell made his distaste for the SAFE Banking Act crystal clear.
Hence, it looks like the U.S. government can’t even get a pro-cannabis-business banking bill passed. Getting a full-scale marijuana legalization bill through Congress would be even more difficult, no doubt.
This is undoubtedly disappointing for some of Tilray’s shareholders, but investors must face harsh realities sometimes.
Don’t Get Your Hopes Up with TLRY Stock
Tilray gets a “D” rather than an “F” because the company doesn’t appear to be headed for ruin or bankruptcy. However, the hype surrounding the North American cannabis market has largely faded, and that’s bad news for Tilray and its stakeholders.
TLRY stock certainly wasn’t a winner during the past few years. Will 2023 be any different? There aren’t any major positive catalysts on the horizon, so this simply isn’t a good time to invest in Tilray.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
