Tilray stock price continued its strong bull run this month, surging to a high of $1.46, its highest level since January and 305% from its lowest point this year. This surge has brought its market capitalization to over $1.53 billion, up from the year-to-date low of $350 million. 

Why Tilray stock price is soaring

Tilray Brands share price has been in a strong bull run in the past few months as investors focused on the ongoing hope that Donald Trump will reschedule cannabis into a Schedule 1 drug, a process that Joe Biden started but did not finish. He recently said:

“We’re looking at reclassification and we’ll make a determination over the next—I would say over the next few weeks, and that determination hopefully will be the right one. It’s (a) very complicated subject,”

Such a move, together with the other moves to deregulate the industry, would benefit Tilray Brands, a cannabis company that does not have a presence in the sector in the United States. 

In the past, Tilray has hinted that it would move into the US when there were friendly regulations at the federal level. While many states have legalized cannabis, the lack of clear federal regulations has hindered the sector, especially on interstate transport and banking.

However, it is still unclear whether Trump will go ahead with the reclassification push as some of the top players in the MAGA push have opposed it. Also, Trump is known to change his mind regularly based on the latest information he receives.

This means that the soaring cannabis stocks could be at risk of a reversal if he decides to listen to his MAGA and evangelical supporters.

TLRY business is struggling 

The new reclassification push has come at a time when Tilray Brands’ business is struggling, as evidenced by the recent results.

Its quarterly earnings report showed that its revenue dropped to $224.5 million in the fiscal fourth quarter, with its top growth engine drivers lagging.

For example, the alcoholic beverage that was supposed to help supercharge its growth, had revenues of $65.2 million, down from $76.7 million in the same period last year.

Read more: Is Tilray stock price rally a trap? history suggests selling

Its core cannabis business also deteriorated in the last quarter, with its sales moving to $67.6 million, from $71.9 million in the fourth quarter of the last fiscal year. 

The company attributed this drop to its decision to pause its vape and pre-roll categories, which helped it to improve its gross margins.

Tilray Brands also published a high net loss during the quarter. It made a $1.26 billion net loss, much higher than the $15 million it made in the same period last year. This loss was mainly because of the impairment of its Aphria purchase.

Tilray stock technical analysis 

TLRY stock chart | Source: TradingView

The daily timeframe chart shows that the TLRY stock price bottomed at $0.3483 on June 23rd and then rebounded to a high of $1.46 today.

The ongoing short squeeze has seen it jump above the 50-day and 200-day moving averages, and a golden cross pattern is slowly approaching..

Tilray’s Relative Strength Index and the MACD have continued rising, with the latter being in the overbought level.

Therefore, the stock will likely keep rising a bit ahead of Trump’s decision, and then it will retreat as investors sell the news. As such, it may surge to $2 and then it will resume the downward trend.

The post Here’s why Tilray stock price is soaring and why it may crash soon appeared first on Invezz