Should You Buy The Dip In Tilray?

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TM Editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

Nanaimo, Canada-based Cannabis producer Tilray, Inc. (TLRY) researches, cultivates, produces, markets, and distributes medical cannabis products. The company has executed some prominent mergers this year to strengthen its global presence. Its acquisition of Aphria is expected to help it grow significantly.

It intends to create a leading cannabis-focused consumer packaged goods (CPG) company with the largest global geographic footprint in the industry. Also, in the summer, TLRY acquired a majority of the outstanding senior secured convertible notes of MedMen Enterprises Inc. (MMNFF), a premiere American cannabis retailer.

Given that a new Congressional Republican-led marijuana legalization bill has been introduced in Congress, TLRY’s recent acquisitions should prove beneficial. Recently, Congresswoman Nancy Mace (R-SC) introduced a bill to decriminalize marijuana, with a majority of Americans now in favor of such a policy.

If the U.S market opens for business fully, TLRY should be able to expand its market reach and improve its operational capabilities. However, things are moving at a slow pace, and it could be some time before TLRY can acquire a larger market share. Also, the company’s weak bottom line is a concern.

Additionally, Barclays’ analysts have noted that the legislation is unlikely to happen under the Biden administration. Barclays also stated that Canadian cannabis companies would struggle to compete with U.S. multi-state operators.

TLRY’s stock performance over the past six months has been sluggish. Its shares have fallen substantially over the past six months. Moreover, the stock has been recently trading below its 50-day and 200-day moving averages. In addition, the stock slumped in price last week. Investors are pulling back from pot stocks due to doubts surrounding the legalization of cannabis at the Federal level. Also, the stock has a 1.52 beta, indicating high volatility.

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