Tilray Share Price Rebound Has More Runway to Run

Summary:
• What is the outlook of the Tilray share price after the strong rebound? We explain why technicals suggest that there is more upside.

Cannabis stocks like TLRY have been on fire lately as hopes of legalization have risen. The Tilray share price jumped to a multi-month high of $8.69, about 85% above the lowest point this year. Other pot stocks like Sundial Growers, Canopy Growth, and Aurora Cannabis have also done well. Most importantly, some of the most popular marijuana ETFs like Cambria Cannabis and Amplify Seymour Cannabis have also had spectacular growth.

Why has TLRY stock jumped?

The main reason why the Tilray stock price has done well in the past few days is that there has been optimism about the legalization of cannabis in the United States. In addition, there is growing optimism that the House will pass the Marijuana Opportunity Reinvestment and Expungement (MORE) act. The bill is set to be voted in Congress in the coming weeks. If this happens, it will be major progress in the United States.

However, it is unlikely that the MORE act will become law any time soon because of the ongoing gridlock in the Senate. While some Republican senators support the legalization of pot, most of them are opposed. And for the bill to pass, it needs 60 members, which is difficult to mobilize. Still, data always show that most Americans are supportive of legalizing pot. In a statement, Barrons noted:

“We expect the MORE Act to clear the House once again, but we view it primarily as a messaging bill as it has no viable path to passage through the Senate.”

So, is the Tilray share price rebound a good buying opportunity. To assess this, we need to exclude the MORE act and assume that it will fail. Next, we should look at the company’s overall performance. In the most recent quarter, the firm said its revenue was $155.15 million, which missed estimates by $15 million. However, its EPS was slightly better than expected. 

According to Seeking Alpha, analysts expect that the company’s revenue will rise to $663 million in 2022 and $781 million in 2023. In addition, the average target of Tilray’s stock price is $8.53, which is a few points above where it is today. All this means that this is a relatively risky stock to invest in.

Tilray share price forecast

The TLRY stock price has been in a strong downward trend in the past few months. Indeed, it has fallen by over 90% from its all-time high. A closer look shows that it was forming a falling wedge pattern before the recent rebound. The stock bounced back when the wedge approached its confluence zone. It has also risen above the short and long-term MAs.

Therefore, for now, there is a likelihood that the Tilray share price will continue gaining momentum. If this happens, the next key reference level will be at $13.93, which was the highest point in November 2021.