Tilray Shares Plunge Amid Regulatory Fears and Post-Split Turmoil

A strategic reverse stock split intended to stabilize Tilray's equity has backfired dramatically, triggering a wave of investor selling instead of restoring confidence. The situation has been exacerbated by fresh regulatory concerns emerging from the United States, creating a toxic mix of negative sentiment. Market participants are now questioning whether this represents a final capitulation or a potential entry point for contrarian buyers.

During Wednesday's session, the cannabis company's stock came under intense selling pressure, ultimately closing down 8.4% at $7.06. A particularly alarming signal was the trading volume, which soared to more than 71% above the average with over 8.5 million shares changing hands. This heightened volatility is largely attributed to the market digesting the 1-for-10 reverse stock split executed on December 2nd. While this corporate action drastically reduced the number of shares outstanding, it has failed to arrest the downward trajectory; on a monthly basis, the share price has been decimated, losing approximately 38% of its value.

Regulatory Headwinds and Divergent Analyst Views

Adding fuel to the fire are reports of a potential U.S. regulatory crackdown. Proposals in Congress to severely limit THC content in industrial hemp products starting in November 2026 have sown deep uncertainty across the sector. Investors fear such measures could significantly curtail the market's growth potential.

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

Wall Street's experts are deeply divided in their assessment of the current crisis:

• The Bullish Case: In a move that caught market attention, analysts at Jefferies raised their price target to $20.00. Issuing a clear "Buy" recommendation, they are signaling substantial upside potential from current levels.
• The Cautious Stance: Market researcher Alan Brochstein upgraded his rating from "Strong Sell" to "Hold." However, he clarified this shift was based solely on the stock's now "acceptable" valuation following the severe price drop, which falls short of an outright endorsement to purchase.

Is "Smart Money" Seeing Value?

While retail investors remain wary, institutional players appear to be adopting a different tactic. Despite a challenging fundamental picture—characterized by a negative price-to-earnings ratio of -3.11 and a twelve-month net loss exceeding $2 billion—some hedge funds have been accumulating positions:

• Millennium Management aggressively increased its stake by 281%.
• Tidal Investments also established new holdings in the company.
• The firm's market capitalization has contracted to roughly $793 million in the wake of the sell-off.

From a technical perspective, the equity is now trading on thin ice near its 52-week lows. All eyes are fixed on the psychologically critical $7.00 support level. A breach below this point could accelerate the downward momentum. Definitive clarity regarding the success of the company's cost-saving initiatives will likely only arrive with the next quarterly earnings report, expected in early January.