By Contributor,Thomas Fuller,Trefis Team

Copyright forbes

CANADA – 2025/07/28: In this photo illustration, the Tilray Brands logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images

Tilray Brands (NASDAQ: TLRY) has witnessed a considerable surge, rising nearly 200% from $0.42 in early July to its present price of $1.24. This increase is largely attributed to the Trump administration’s deliberation on reclassifying cannabis from a Schedule I to a Schedule III substance. If enacted, this change would categorize it with drugs such as ketamine and anabolic steroids.

Alongside this potential policy change, Tilray has been enhancing its business operations. The company is concentrating on product differentiation and developing new products for its premium segment. Additionally, it has expanded its footprint in Europe by launching new EU-GMP certified medical cannabis strains in Germany.

The pivotal question for investors at this juncture is whether TLRY stock remains a compelling investment at its current price of $1.24. Although the company’s recent financial and operational results may not position it as the most obvious option, there exists significant upside potential, mainly due to the prospective reclassification of marijuana. This alteration could confer various advantages to the cannabis sector.

For a more detailed exploration of Tilray’s upside potential, please consult our separate analysis – What’s The Upside Potential For Tilray Brands? The following sections will present an in-depth examination of the company’s operational performance, financial status, and valuation.

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Let’s delve into the details of each of the assessed factors but before that, for a quick background: With a $1.2 Bil market cap, Tilray Brands engages in the research, cultivation, production, marketing, and distribution of medical cannabis products across various business segments, including GMP-certified flowers, oils, vapes, edibles, and topicals.

Below is our multi-factor evaluation:

Our View On TLRY Stock

[1] Valuation Appears Low

TLRY Valuation

This table illustrates how TLRY is valued in comparison to the broader market. For further details, see: TLRY Valuation Ratios

[2] Growth Rates Are Erratic

Tilray Brands has observed its revenues grow at an average rate of 9.9% over the last 3 years

Its revenues have increased by 4.1% from $789 Mil to $821 Mil in the past 12 months

Additionally, its quarterly revenues decreased by -2.3% to $225 Mil in the latest quarter from $230 Mil a year prior.

TLRY Revenue Growth

This table outlines how TLRY’s growth compares to the broader market. For more information, see: TLRY Revenue Comparison

[3] Profitability Appears Quite Weak

In the last 12 months, TLRY reported an operating income of $-108 Mil, resulting in an operating margin of -13.1%

With a cash flow margin of -11.5%, it generated nearly $-95 Mil in operating cash flow during this timeframe

For the corresponding period, TLRY amassed approximately $-2.2 Bil in net income, indicating a net margin of around -266.3%

TLRY Profitability

This table illustrates the profitability of TLRY in comparison to the broader market. For additional details, see: TLRY Operating Income Comparison

[4] Financial Stability Appears Strong

TLRY’s debt stood at $329 Mil at the conclusion of the most recent quarter, while its current market cap is $1.2 Bil. This indicates a debt-to-equity ratio of 26.7%

TLRY’s cash (including cash equivalents) constitutes $256 Mil of $2.1 Bil in total assets. This results in a cash-to-assets ratio of 12.4%

TLRY Financial Stability

[5] Downturn Resilience Is Very Weak

TLRY has performed significantly worse than the S&P 500 index during various economic downturns. We evaluate this based on (a) the extent of the stock’s decline and (b) the speed of recovery.

Inflation Shock of 2022

TLRY stock plummeted 97.6% from a peak of $63.91 on February 10, 2021, to $1.52 on June 23, 2023, compared to a peak-to-trough decline of 25.4% for the S&P 500.

The stock has yet to rebound to its pre-crisis peak

The highest value it has reached since then is $3.31 on September 11, 2023, and it currently trades at $1.24

TLRY Stock Performance During the 2022 Inflation Shock

COVID-19 Pandemic of 2020

TLRY stock dropped 88.4% from a high of $21.36 on January 15, 2020, to $2.47 on March 18, 2020, versus a peak-to-trough decline of 33.9% for the S&P 500.

Nonetheless, the stock fully recovered to its pre-crisis peak by February 2, 2021

TLRY Stock Performance During The 2020 COVID-19 Pandemic

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The Bottom Line

Investing in Tilray Brands presents a high-risk, high-reward scenario, chiefly influenced by potential regulatory transformations. The main catalyst is the likelihood of the U.S. government reclassifying cannabis from a Schedule I to a Schedule III substance.

This possible policy alteration, paired with what some may perceive as an appealing valuation, could provide substantial upside for investors who are willing to take on higher risks. Nevertheless, based on the current financial and operational status of the company, the stock seems to be fairly valued.

As with any investment, there’s a chance that this evaluation may be incorrect. We strongly advise investors to thoroughly analyze all risk factors before deciding on TLRY stock.

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