Tilray, a Canadian marijuana producer listed on NASDAQ under the ticker TLRY, saw its stock price drop by 19.4% by mid-morning on Friday. This comes in light of a recent decision to implement a 10-for-10 reverse stock split, which involves consolidating 10 shares into one. The split is set for June 10, 2025.
On that date, Tilray’s shares will decrease from around 1.16 billion to 116 million. While this might sound like “good” news in some contexts, investors will technically hold 10% less of the company’s shares than before. Following the stock split, trading will resume on December 2nd at an estimated opening price of around $8.10 per share, up from the previous $0.81. However, there are concerns that further selling could drive that price down.
This fear resonates with today’s sellers who worry about potential declines. It’s important to note that, similar to a traditional stock split, a reverse stock split doesn’t change the company’s core operations; it merely adjusts the price of the shares. The aim here, of course, is to elevate the stock price, reducing the risk of being delisted.
Nevertheless, this action highlights a troubling trend: Tilray has struggled to cultivate a robust business that can drive its stock price upwards on its own. For many investors, that might just be enough reason to reconsider their holdings in Tilray.
Before diving into investing in Tilray, it’s wise to weigh the possible risks. Analysts have pointed out various stocks with better potential for growth, and, as it stands, Tilray is not on their recommended list.
