Tilray stock price has slumped in the past few weeks, moving from a high of $23.15 on October 9 to $7.20 today. This crash may accelerate in the coming weeks as a death cross pattern nears.
Tilray stock price technical analysis
The daily timeframe chart shows that the Tilray Brands stock price has been in a strong downward trend in the past few months, erasing most of the gains made a few months ago when it moved from a split-adjusted low of $3.58 in June to $23.15.
The plot has thickened in the past few weeks as it moved below all moving averages. It is now about to form a death cross, which happens when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. It is one of the most popular bearish patterns in technical analysis
Tilray Brands share price has dropped below the important support level at $10.35, its lowest level on September 11.
At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have continued moving downwards and are now in their oversold level.
The Average Directional Index (ADX) has continued rising, a sign that the downtrend is gaining momentum.
Therefore, the most likely scenario is that the TLRY stock price will continue falling in the near term, barring any major announcement. If this happens, the next key support level to watch being the psychological level at $5.
On the other hand, a move above the important resistance level at $10.35 will invalidate the bearish outlook and point to more upside, potentially to the psychological level at $15.
Tilray Brands is facing major challenges
The ongoing Tilray stock price has mirrored the performance of the other companies in the cannabis industry.
Data shows that the popular AdvisorShares Pure US Cannabis ETF (MSOS) has crashed by 40% from its highest level in August this year. Top cannabis companies like Curaleaf, Green Thumb Industries, Trulieve, and Cresco Labs have all plunged in the same period.
The main cause for the crash is that Donald Trump has remained muted on cannabis reclassification in the United States. A few months ago, he hinted that he was close to a decision, and even shared a meme promoting CBD for senior citizens.
Tilray Brands business is also facing major headwinds, especially in its beverage business, which it has invested heavily in.
The most recent results showed that the beverage segment made $55.7 million in revenue, down from the $56 million it made in the same period last year.
This slowdown mirrors the performance of other companies in the beer industry, which have remained under pressure in the past few years. A closer look at its performance shows that companies like Boston Beer and Molson Coors shows that most of them have plunged in the past few months.
The slowdown in the segment was offset by a 5% increase in the cannabis business, whose revenue rose by 5% to $64.5 million. Its wellness and distribution revenues rose to $15.2 million and $74 million, respectively.
Another positive is that the company improved its balance sheet by reducing its outstanding debt by $7.7 million, a move that brought the ratio of net debt to EBITDA to 0.07, while its cash balance stood at over $268 million.
Looking ahead, the performance of the Tilray stock price will depend on Donald Trump’s statement on reclassification. A supportive policy will be bullish for the stock, while continued silence will make things worse.
READ MORE: Tilray stock: why options data is skewed to downside despite solid Q1 earnings
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