Tilray Brands (NASDAQ:TLRY) just released its results for the third quarter of its fiscal 2024, and there’s nothing particularly objectionable in the info. Nevertheless, Tilray stock dropped 18% this morning, and investors may ponder whether there’s a chief bargain for the taking here.

Alternatively, Tilray stock is perhaps “low cost for a reason,” because the old saying goes. Does the market perceive trouble ahead for Tilray Brands?

As at all times, I’d encourage investors to depend on the actual data moderately than on the fickle sentiment of short-term traders. That said, it’s vital to attempt to determine why the market is selecting to not partake of Tilray stock today.

A blue-chip canna-business

Every market sector has its blue-chip corporations and stocks, including the cannabis-products sector. A decade ago, the bluest of the cannabis blue chips can have been Cover Growth Corporation (NASDAQ:CGC).

Nonetheless, Cover isn’t the 800-pound gorilla within the room anymore. The last word blue-chip cannabis company would definitely be Tilray Brands, which owns Aphria, Hexo and Truss Beverages Company.

Aphria was a considerable canna-business in its own right, and Tilray is now a world juggernaut amongst cannabis corporations. Thus, if Tilray is prospering, it’s an excellent sign for the sector as an entire.

Tilray and the remainder of the cannabis market appeared to thrive in 2018. During that point, it felt like full legalization within the U.S. was right across the corner. Moreover, commentators were buzzing about so-called Cannabis 2.0, wherein producers like Tilray were expected to earn cash hand over fist from ancillary cannabis products (a.k.a. “derivatives”) like vapes and edibles.

Because it turned out, Cannabis 2.0 was more hype than reality. Secondary cannabis products didn’t become huge sellers like some investors hoped they might be. Moreover, there was no massive tidal wave of cannabis decriminalization within the U.S.

Consequently, Tilray stock collapsed from $300 in 2018 to only $1.60 in mid-March. It was a devastating share-price collapse for canna-wealth hopefuls.

Nonetheless, Tilray stock suddenly picked up steam throughout the past few weeks, rallying from $1.60 to $2.59 before tumbling this morning. To some extent, the share-price run-up could also be attributed to the recent expansion of Tilray’s cannabis brands.

The first catalyst though might be the resurgence of hope for full cannabis legalization within the U.S. and elsewhere. Germany decriminalized cannabis for private use, and Canada’s government is considering reducing the excise taxes on cannabis producers. Furthermore, recent comments from U.S. Vice President Kamala Harris suggest that she favors reclassifying marijuana.

On top of all that, legalized marijuana use for recreational purposes might be on the ballot in Florida in November. Thus, given the aforementioned facts and catalysts, it definitely looks like an ideal storm is brewing, and Tilray stock should be flying higher.

Tilray stock tanks despite solid quarterly results

Moreover, Tilray just published its financial results for the third quarter of fiscal 2024, and there’s loads of fodder for the bulls. If anything, Tilray’s results only point to growth and improvement.

Here’s what investors have to know. Initially, the corporate’s net revenue increased by roughly 30% to $188.3 million. A selected highlight for the quarter was Tilray’s beverage-alcohol net revenue, which soared 165% to $54.7 million. Perhaps then, there could also be a renaissance in cannabis derivatives in 2024 — even when it didn’t occur in 2018.

At the identical time, Tilray’s primary business, cannabis production, also brought a powerful revenue stream. Notably, the corporate’s cannabis-segment net revenue grew 33% to $63.4 million in Q3 FY2024.

Moreover, Tilray’s adjusted gross profit increased 17% to $51.6 million. Frankly, I just couldn’t find anything in the corporate’s quarterly results to justify the share-price decline today. Tilray even managed to narrow its net earnings loss from $1.2 billion within the year-earlier quarter to only $105 million within the fiscal third quarter.

This begs the query of why Tilray dropped 18% this morning. I believe that it’s only a hangover after the party, because the stock has rallied sharply over the past three weeks.

Nonetheless, on a multi-year basis, Tilray stock remains to be down substantially. The corporate appears to be making progress toward profitability, and while there aren’t any guarantees, changes could also be coming by way of cannabis laws. Due to this fact, there’s still a long-term dip to be bought, and cannabis bulls might consider picking up a number of Tilray shares for a small, speculative position.