TLRY

Tilray Brands ($TLRY) CFO Buys Again Despite 68% Plunge... 'Bottom Signal' vs 'Further Decline' Crossroads

07/30/2025 19:19

Tilray Brands ($TLRY) is sending mixed signals to investors. While shares have plummeted 68% since June last year to trade at $0.58, CFO Carl Merton has made two aggressive purchase decisions that are drawing attention. Tilray Brands is a Canada-based cannabis and medical cannabis company that has been expanding its business scope through overseas market penetration in Germany, Australia, and Italy. Particularly in the medical cannabis sector, the company has been attempting differentiation with EU-GMP certified products, and recently has been pursuing diversification by acquiring four craft breweries from Molson Coors in its beverage alcohol division. However, the stock performance has been brutal. Starting at $1.8 in June 2024 and rising to $2.03 by the end of July, shares began a sharp decline from November, falling to the current level of $0.58. This represents a market capitalization contraction to around $533 million, keeping it within small-cap territory. Against this backdrop, the CFO's moves are noteworthy. Carl Merton purchased 26,000 shares at $1.36 ($35,360 worth) on November 15 last year, followed by an additional purchase of 33,500 shares at $0.60 ($19,939 worth) on July 30 this year. Notably, he bought more shares at an even lower price as the stock continued declining. Both transactions also disclosed that his spouse holds 20,000 shares, indicating substantial family-level accumulation. From an insider trading perspective, this represents a quite strong signal. Insiders typically have access to non-public company information, making their trading actions potential hints about future prospects. Given his CFO position, his judgment about financial conditions and future outlook likely influenced these purchase decisions. However, the reality remains challenging. Recent earnings show Q1 2025 revenue of $185.78 million, down 1.4% year-over-year, with a loss per share of 10 cents. This fell short of analysts' revenue expectations of $210.02 million, causing shares to plunge 21% following the earnings announcement. Industry-wide cannabis challenges cannot be ignored. The DEA has repeatedly postponed cannabis rescheduling hearings, creating ongoing uncertainty across the sector. The failure of Florida's recreational cannabis legalization ballot measure has disappointed expectations for regulatory improvement, causing related stocks to decline broadly. Nevertheless, Tilray possesses several positive elements. The company obtained new cultivation licenses in Germany and received Italy's first authorization for therapeutic medical cannabis distribution. Additionally, while shareholders approved a reverse stock split, the company has paused implementation to evaluate timing and stock price, showing management's careful situation assessment. Investors should note the CFO's purchase pattern. Making a larger additional purchase despite the stock's further decline following his first purchase suggests not mere "averaging down" but rather confidence in the company's medium to long-term prospects. The $0.60 price point is near 52-week lows, indicating strong bottom-fishing characteristics. Looking ahead, regulatory environment changes in the cannabis industry will be key variables. If DEA rescheduling decisions are made and more states proceed with legalization, this could positively impact the entire sector. Additionally, if Tilray's overseas expansion and diversification strategies begin showing results, this could lead to earnings improvements. However, risks remain substantial. Structural industry issues including oversupply and pricing pressures persist, along with ongoing regulatory uncertainty. Further downside risks cannot be ruled out even at current price levels. In conclusion, while the CFO's consecutive purchases represent positive signals, this alone is insufficient for investment decisions. Given the stock's significant decline, interested investors should carefully observe future earnings improvements and regulatory environment changes while taking a cautious approach. The next quarterly earnings announcement and DEA rescheduling decision timing should be key observation points.