Tilray Brands Inc

Tilray Brands, Inc. (NASDAQ: TLRY) is a global cannabis-lifestyle and consumer packaged goods company. The Company operates through four segments: Cannabis business, Distribution business, Beverage alcohol business and Wellness business. The Cannabis business segment is engaged in the production, distribution, sale, co-manufacturing, and advisory services of both medical and adult-use cannabis.

Recent Financial and Business Updates:

• US cannabis stocks experienced a notable rally on Friday following Vice President Kamala Harris's call for the Drug Enforcement Administration (DEA) to expedite its decision on cannabis rescheduling "as quickly as possible." This development underscores growing speculation that the Biden administration views cannabis reform as a significant electoral issue and is committed to implementing substantial changes. The market excitement was further fueled by statements from Seabreeze Capital Partners' Dougie Kass, who announced that the DEA is expected to imminently approve cannabis rescheduling, with significant legal obstacles reportedly resolved favorably. Additionally, testimony from Department of Health and Human Services (HHS) Secretary Xavier Becerra before a US Senate committee defended the recommendation for rescheduling, citing alignment with scientific evidence. Harris made these statements during a White House roundtable, attended by individuals who had received federal pardons under President Joe Biden's 2022 initiative, emphasizing the urgent need to reconsider the classification of marijuana, given its disproportionate comparison to substances like heroin and fentanyl.
• Record-Breaking Growth Propels Company to New Heights: In the second quarter of fiscal year 2024, our company soared to unprecedented levels, achieving a remarkable net revenue of USD 194 million, representing a staggering 34% surge compared to the previous year. This extraordinary accomplishment underscores our dominance in the global cannabis industry, with a commanding market share in Canada and exceptional growth in both domestic and international sectors. Additionally, our foray into craft beer brewing in the U.S. solidifies our position as a formidable player in the beverage-alcohol market, setting the stage for even greater achievements.
• Efficiency Mastery: Maximizing Returns through Strategic Integration: Demonstrating unwavering dedication to operational excellence, we are making substantial strides in seamlessly integrating the HEXO acquisition. Our meticulous efforts are poised to yield annual savings of USD 30-USD 35 million, a testament to our commitment to driving efficiency and optimizing performance. With steadfast adherence to our fiscal year 2024 financial guidance, we exude confidence in our ability to deliver sustained growth and value creation.
• Financial Fortitude: Navigating Challenges with Resilience: Despite the dynamic landscape of the cannabis market, our second quarter financial report showcases unwavering strength and resilience. Notable increases in gross profit, adjusted gross profit, and net revenue underscore our ability to overcome obstacles and thrive in the face of adversity. The substantial reduction in net loss, coupled with impressive adjusted EBITDA figures, highlights our dedication to enhancing profitability and operational efficiency.
• Liquidity Triumph: Strengthening Financial Foundations: Maintaining a robust financial liquidity position is paramount to our success, and we are delighted to announce significant progress in this regard. With approximately USD 261 million in liquidity, bolstered by a healthy cash reserve and marketable securities, we fortify our financial stability and flexibility. Moreover, our proactive approach to reducing outstanding convertible debt underscores our commitment to prudent financial management and long-term sustainability.
• Optimism Amidst Challenges: Long-Term Growth Trajectory Intact: While the second quarter witnessed temporary challenges, including negative operating cash flow, stemming from acquisition-related settlements, our optimism about long-term prospects remains unwavering. Our resilient performance, strategic focus, and unwavering commitment to shareholder value creation position us for continued success and sustained growth in the foreseeable future.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI), calculated over a 14-day span, stands at 55.73, currently upward trending, signifying the likelihood of either more consolidation or an upward momentum. Adding to this, the stock presently finds itself positioned above both the 21-day and 50-day Simple Moving Averages (SMA), which could function as a dynamic short-term support levels. Now, the stock's price is currently near a resistance zone of USD 2.00-USD 2.20, with expectations of an upside movement if these levels are broken on the upside.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given to Tilray Brands, Inc. (NASDAQ: TLRY) at the current market price of USD 1.86, as of March 19, 2024, at 06:50 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 19, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.