Down 40% this year. Will Tilray Brands stock perform significantly better in 2025?

Marijuana legalization doesn’t seem to be on the horizon any time soon. And because of the lack of enthusiasm in the industry, many cannabis stocks are in big trouble. Tilray brands (TLRY -2.98%) is no exception as the company appears to be on track for another difficult year, with its share price down more than 40% so far in 2024 entering trading on Monday.

But given that the stock has not only taken such a hit this year, but has fallen more than 90% over the past five years, can we expect a recovery in 2025 given improving financials?

Tilray has continued to find ways to grow outside of cannabis

Although there haven’t been many enticing growth opportunities for Tilray in the cannabis industry in recent years, the Canada-based company has been looking for other ways to expand its operations. A good example of this is in the beverage space, where Tilray has acquired several alcohol brands. This has allowed the company to expand to additional locations across the U.S., potentially putting it in a better position for the day marijuana is legalized in the country (though there’s no guarantee that will happen any time soon or will happen at all). ).

In its most recent quarterly results, which covered the three-month period ended August 31, Tilray’s net revenue recently hit $200 million. And a big reason for the 13% increase in revenue compared to the same period last year was the company’s beverage sales more than doubled during that time, as acquisitions helped boost Tilray’s sales in that segment.

TLRY sales data (quarterly) from YCharts

Unfortunately, due to high overhead costs, the company has not made sufficient progress on costs; Tilray suffered a net loss of $34.7 million in its most recent quarter. While that was an improvement from a total loss of $55.9 million a year ago, it also highlights how difficult it is for the company to stay out of the red.

Is there a catalyst out there that can help Tilray stock recover in 2025?

The last time Tilray stock finished a year higher was in 2018, when shares rose more than 215%. This year, Canada legalized marijuana for recreational use. And unless a similar catalyst emerges for Tilray and the cannabis industry as a whole, 2025 could be another difficult year for the stock.

While Tilray has made good, incremental gains over the past few years to expand its operations, much of the bullish sentiment around the company ultimately comes down to hopes that the US will legalize marijuana and the growth opportunities that open up for Tilray would. With greater uncertainty over whether a Republican administration incoming next year will support legalization, 2025 could be another disappointing year for struggling cannabis stocks.

Should you buy Tilray shares today?

Lack of profitability and disappointing growth prospects in the cannabis industry are two big reasons why investors should be extremely cautious about Tilray Brands stock. The situation is so concerning that I don’t even think the company will be considered a cannabis company in five years; Due to the need to diversify and become less reliant on marijuana in the future, its operations could look very different.

Even if you have a high risk tolerance, you’ll need a lot of patience with Tilray Brands stock. While it may be one of the bigger and better cannabis stocks, that’s still not a good reason to invest in it right now. Investors should consider better growth stocks that carry far less risk than Tilray. This is a good stock to add to your watchlist, but I wouldn’t recommend putting significant money into it given the challenges it faces.