Wall Street can be very unforgiving. Unfortunately, a stock doesn't remember prices it once traded at -- and prices can keep rising or falling. Investors have seen this firsthand with Tilray Brands (TLRY 3.67%), a once-promising cannabis stock.
Its shares have declined 16% over the past year. Even worse, the stock is down by 74% over the past three years and 97% over the past five years. Why has Tilray stock struggled, and is it time that investors dump their shares?
Here is what you need to know.
Image source: Getty Images.
A sprint for growth, with mistakes along the way
Tilray was among the first movers in the cannabis legalization craze that swept North America almost a decade ago. After going public, Tilray, like other early cannabis companies, rushed to sign partnerships and make acquisitions, aiming to grow as quickly as possible.
Today, it's one of the world's largest cannabis companies, with annual sales of over $837 million. The company deals in cannabis flower, beverages, and medicinal products. So, in a sense, Tilray succeeded. However, two problems have surfaced over time.
First, Tilray hasn't necessarily executed very well. Despite its growth, the business has continued to burn cash throughout its years as a public company. On top of that, legalized cannabis just hasn't been the gold mine many hoped for. Illicit markets still pressure pricing and profit margins for legalized products, which often carry taxes and fees imposed by governments and regulators.
Tilray has issued boatloads of new shares over the years to raise money. The share count has risen by 495% since it began trading on U.S. markets in July 2018. That dilution helps explain why the stock has done so poorly.
NASDAQ: TLRY
Key Data Points
Should investors dump Tilray stock?
When a stock declines as much as Tilray has, it needs to multiply in price many times over to recover. Tilray doesn't seem to have the growth potential to make that happen. Total net revenue grew by only 3% in the second quarter of its fiscal year 2026, and Wall Street estimates call for just low-to-mid single-digit growth through the end of next fiscal year.
TLRY Revenue Estimates for Current Fiscal Year data by YCharts
It's hard to shake the feeling that holding Tilray stock, let alone buying more shares, is throwing good money after bad. Tilray's management team has done what it needed to do to keep the company afloat over the years, but that sometimes comes at the expense of shareholders, and that seems to be the case here. It's probably better to dump the stock and look elsewhere until Tilray proves itself more.
