Tilray Brands, a prominent player in the global medical cannabis industry, closed its trading session on Thursday at $12.34, marking a decline of 4.2%. Since its initial public offering in 2018, the company has seen its stock plummet by a staggering 94%. The trading volume for Tilray reached 66.7 million shares on Thursday, significantly surpassing its three-month average of 10.9 million shares by 514%.
The cannabis sector reacted strongly on Thursday to a recent executive order issued by former President Donald Trump, which reclassified marijuana. Investors are closely monitoring the ramifications of this policy change on the U.S. cannabis landscape. In the broader market, the S&P 500 gained 0.79%, closing at 6,774, while the Nasdaq Composite rose 1.38% to finish at 23,006. However, other cannabis sector peers, such as Canopy Growth and Cronos Group, faced declines, with shares falling 12% and 2%, respectively.
In the lead-up to this announcement, speculation surrounding a potential reclassification of cannabis had already driven Tilray’s stock price up over 50% in recent weeks. Thursday’s formal announcement confirmed the rumors, as President Trump moved cannabis from a Schedule I to a Schedule III classification. Despite an initial uptick in share price following the news, Tilray’s stock ultimately fell by 4% by the end of the day, leading analysts to suggest that the drop could represent a “buy the rumor, sell the news” situation.
Another possible factor for the decrease may be investors’ disappointment that the reclassification did not include broader legalization for recreational use, a move that could have further benefited Tilray’s market position. As it stands, Tilray continues to be a high-risk investment, with its profitability remaining marginal on an EBITDA basis. Nevertheless, the recent news may pave the way for improved growth opportunities for the company in the future.
