Marijuana legalization doesn’t appear to be on the horizon any time soon. And due to the lack of enthusiasm in the industry, many cannabis stocks are in deep trouble. Tilray Brands (NASDAQ:TLRY) is no exception as it appears to be on track for another tough year, with its stock price down more than 40% so far in 2024, entering trading on Monday.

But with the stock suffering such a setback not only this year, but falling more than 90% over the past five years, is it expected to rebound in 2025, given its improving financial situation?

Tilray continued to find ways to grow outside of cannabis

Although there haven’t been many attractive growth opportunities for Tilray in recent years in the cannabis industrythe Canadian company looked for other ways to expand its operations. A good example of this is the beverage sector, where Tilray has acquired several alcohol brands. In doing so, it was able to expand to more locations in the United States, potentially putting it in a better position for the day when marijuana becomes legal in the country (although there is no guarantee that this will happen anytime soon, or not at all). ).

Net sales recently hit the $200 million mark for Tilray in its latest quarterly results, which covered the three-month period ending August 31. And a key reason for the 13% increase in revenue over the prior-year period was its beverage sales more than doubled during that period as acquisitions helped bolster Tilray’s revenues in this segment.

TLRY revenue (quarterly) data by Y Charts

Unfortunately, due to its high overhead costs, the company has not made enough progress on costs; Tilray suffered a net loss of $34.7 million last quarter. While this represents an improvement from a loss totaling $55.9 million a year ago, it highlights the company’s struggles to stay out of the red.

Is there a catalyst that could help Tilray stock rebound in 2025?

The last time Tilray stock ended a year in positive territory was in 2018, when its shares surged more than 215%. This is the year Canada legalized marijuana for recreational use. And unless a similar type of catalyst is on the horizon for Tilray and the cannabis industry as a whole, 2025 could be another tough year for the stock.

Although Tilray has made incremental gains in recent years to expand its operations, much of the optimism around the company ultimately has to do with hopes that the United States will legalize marijuana and the growth opportunities that would open for Tilray. With greater uncertainty over whether the Republican government that takes power next year will support legalization, 2025 could be another disappointing year for the struggling marijuana stock.

Should you buy Tilray stock today?

The cannabis industry’s lack of profitability and disappointing growth prospects are two main reasons why investors should be extremely cautious of Tilray Brands stock. The situation is sufficiently worrying for I don’t even think the company will be considered a cannabis company in five years.; its operations could look very different due to the need to diversify and rely less on marijuana in the future.

Even if you have a high risk tolerance, you’ll also need a lot of patience with Tilray Brands stock. While it may be one of the biggest and best cannabis stocks to own, it’s still not a good reason to invest in it right now. There is best growth stocks to be considered by investors, which carry much less risk than Tilray. This is a good stock to put on a watchlist, but it’s not a stock I would suggest investing a lot of money in given the challenges it faces.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.