Over the past five years, Tilray Brands (TLRY +1.84%) has lost about 90% in market value, and it's hardly surprising. The cannabis leader's financial results have been subpar, at best, while it continues to navigate a challenging regulatory landscape.
Thankfully for Tilray, the market is forward-looking. But is there enough in the company's outlook to make the stock attractive?
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A potential catalyst
One of the best things that could happen to Tilray right now is if the U.S. legalizes cannabis at the federal level. That would open up a significant opportunity, allowing pot growers to access banking services in the country more easily. It would also allow them to ship cannabis across state lines.
This is the opportunity Tilray has been waiting to see. The company has significant footprints in the U.S., including through its craft brewing business. If cannabis is legalized in the country, the company will be well-positioned to hit the ground running and utilize its existing infrastructure to reach customers more quickly than most of its peers. That's the hope.
The company's stock has moved in the right direction in the past six months in anticipation of marijuana legalization. Shares have gained 90% over this period.
NASDAQ: TLRY
Key Data Points
Is it worth the risk?
However, would legalization really save Tilray? After all, similar developments in Canada were unable to make it a successful and profitable company. Would things really be different this time around?
That depends on too many factors that are beyond Tilray's control. Will there still be significant regulatory oversight if the U.S. legalizes cannabis? How will larger corporations with experience in dealing with controlled substances respond? How will consumers, many of whom have been getting marijuana from illegal channels, change their habits?
These and many other questions are impossible to answer. Also don't forget that so far, legalization isn't a sure thing, which is why Tilray's future remains far too uncertain. With so many questions unanswered, investors should stay away from this stock.
