Tilray Shares Blazing: What's Behind the 55% Rally This Month?

Key Points

• Shares of cannabis firm Tilray surged by about 55% in a month, though they remain significantly below one-time highs.
• Some positive financial signals, expanded product lineups, and a key authorization in Italy may have helped to boost TLRY.
• Still, the threats facing the cannabis industry more broadly make Tilray a high-risk proposition, despite recent momentum.

Tilray Brands Inc. NASDAQ: TLRY, once a leading light in the legal cannabis industry with shares trading as high as nearly $150, has seen its stock price almost entirely collapse in recent years. A multitude of factors may be to blame—the lack of federal legalization of recreational cannabis, regulatory inconsistencies, problems matching supply and demand, and more have all devastated the industry.

Nonetheless, Tilray shares have behaved remarkably around the midpoint of 2025, rising by some 55% in a one-month span. Could it be that projected cash flow and profitability, the possibility of more favorable regulatory environments, and an expanded geographical and product focus could inspire a long-term turnaround for a company that is down more than 99% from its all-time share price high?

To be sure, Tilray remains a highly risky bet, but investors with the tolerance to approach a volatile industry might find reasons to consider it.

Positive Cash Flow Signal, But Financial Troubles Remain

Tilray has long faced a profitability hurdle, and while the company has yet to achieve consistent positive cash flow, some analysts believe it could accomplish this goal in the coming quarters. The company has boosted its margins—the most recent quarter saw the highest cannabis gross margins in about two years, rising to 41% from 33% a year earlier. Additionally, the company achieved an overall gross margin of 28% compared with 26% for the prior-year quarter.

Tilray has also been focused on reducing debt and has been largely successful in these efforts. As of the third-quarter fiscal 2025 earnings release, the company's debt level was under 1x its trailing 12-month EBITDA.

Further, the firm's beverage arm is making progress on Project 420, an initiative to reduce costs and improve efficiency and profitability that is expected to be completed in the next year.

All of these factors may have contributed to Tilray's recent rally, although investors should keep in mind that the firm still faces financial uncertainty. The latest earnings report revised the company's fiscal 2025 revenue estimates down to a range of $850 million to $900 million from a prior range of $950 million to $1 billion. Despite recent successes, Tilray also still underperformed analyst predictions in the latest earnings round.

Regulatory Questions Linger, But is There Some Reason for Optimism?

Another driver of TLRY's recent price increase could be optimism about the regulatory environment under the second Trump administration. Advocates have anticipated that the U.S. Drug Enforcement Administration (DEA) might reclassify cannabis to Schedule III from Schedule I of the Controlled Substances Act, a move that would maintain the status of the drug as illegal on a federal level while allowing for more robust medical research.

Unfortunately for supporters of this change, though, the DEA has continued to postpone these efforts for several months. However, the rescheduling process may be restarted if Terrance Cole is confirmed as the next DEA Administrator following a five-month period since his nomination to the position by President Trump.

Expanded Focus May Broaden Revenue Streams

Tilray has broadened its product lineup considerably in recent quarters. Most recently, the company added a new line of summer cannabis products through subsidiaries, affirming the central role cannabis continues to play in its operations.

It has been about two years since Tilray acquired a significant beverage portfolio from Anheuser-Busch. The company has continued to bulk up its holdings in that area as it has become one of the largest craft brewers in the U.S. The company's beverage revenues continue to climb.

On the cannabis front, the firm recently gained critical authorization from the Italian Ministry of Health to import and distribute its own proprietary medical cannabis flowers for therapeutic purposes. Alongside the company's endeavors throughout Europe, this latest development could help to cement Tilray's position in a burgeoning and largely unaddressed market.

Caution Still Wins the Day

Despite these positive developments, investors should exercise caution before making a Tilray investment. The company's share count has repeatedly increased in recent years, and the recent rally threatens its value prospects.

Ultimately, though, the biggest risk with a TLRY investment might simply be that the legal cannabis industry overall has yet to establish itself in the United States, and even well-known companies like Tilray currently lack stability.