Tilray Shares Navigate a Week of Sharp Swings

The shares of Tilray Brands experienced significant volatility last week, driven by shifting regulatory expectations in the United States. A powerful rally at the start of the week was swiftly undone, highlighting the fragile sentiment surrounding cannabis stocks.

Market movements were directly tied to developments from the U.S. government. Initial signals that authorities planned to reclassify cannabis from a Schedule I to a Schedule III substance fueled a major advance. However, the subsequent formal signing of the executive order by President Donald Trump prompted a classic market reversal, where traders sold on the confirmed news after buying on the rumor.

This pattern was clear in the price action. On December 16, Tilray's stock surged 27.54% to close at $13.94. By Friday, it had retreated sharply, finishing at $11.16 for a single-day loss of 9.56%.

The Implications of Rescheduling

The confirmed move to Schedule III status, which denotes a lower-risk substance, forms the core of the long-term bullish thesis for the industry. The potential financial impacts are substantial:

• Taxation: Companies could see major tax burdens lifted by escaping the restrictions of Section 280E.
• Banking: The path would open for broader access to essential institutional banking services.
• Scientific Research: Regulatory bodies are expected to expedite the rescheduling process, facilitating more comprehensive medical studies.

Despite these fundamentally positive shifts for Tilray's business model, the short-term price reaction has been negative, with profit-taking erasing a significant portion of the week's gains.

Should investors sell immediately? Or is it worth buying Tilray?

Surging Volume and Options Activity

Trading interest in Tilray equity spiked dramatically. The volume on the December 16 rally reached 46.8 million shares changing hands—approximately 525% above the three-month average. Even during the pullback on December 18, activity remained exceptionally high at 66.7 million shares.

Attention in the options market is turning toward the December 26 expiration. Notably, the largest concentration of both call and put open interest is centered at the $12.00 strike price. This clustering indicates that speculative bets on both sides of the trade are converging around that key level, setting it up as a near-term battleground.

Market Valuation and Sector Context

Tilray currently carries a market valuation between $1.25 and $1.29 billion. Analyst perspectives are varied but point to calculated upside potential:

• Consensus Rating: "Hold"
• Average Price Target: $20.00
• Upside from Current Level: Nearly 79%, contingent on the company successfully leveraging the new regulatory environment.

On the risk side, short interest stands at 8.86% of the free float, indicating a measurable portion of the market is betting on continued downward pressure. The similar price action seen in peers like Canopy Growth and Aurora Cannabis suggests a sector-wide reassessment is underway.

Technical Outlook Entering a Short Week

As trading resumes, the $11.00 zone emerges as a critical short-term support level. A successful defense of this area would suggest the aggressive repositioning following the executive order has run its course. Conversely, a decisive break below it would signal that the "sell the news" dynamic remains in control, likely extending the sector's retreat from its recent peak of euphoria.