Tilray Stock Rides Key Level Into Earnings: What's Next?

Ahead of Tilray, Inc’s TLRY fourth-quarter and fiscal year 2021 earnings print set for Wednesday, Cantor Fitzgerald cut the Canadian cannabis giant's price target from $24 to $19. Although the reduced-price target is still about 40% above Tilray’s current share price, the adjustment caused Tilray to trade lower.

Click here to listen to Irwin Simon, CEO of Tilray ($TLRY) Interview on Benzinga Cannabis Hour Podcast.

Tilray’s stock hasn't made volatile reactions to its earnings historically, but Wednesday’s print could make or break the stock for the short term because it's trading just above a key support level. If the stock can make it through earnings unscathed on Wednesday, there is a shareholder meeting and vote on Thursday that, if approved, will change Tilray’s underlying statistics.

The company is asking shareholders to approve a share dilution proposal it says will help Tilray with its strategic development goals and to increase shareholder value. Tilray currently has about a 446 million share float and a market cap of $6.11 billion.

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The Tilray Chart: On July 14, Tilray barreled down through a long-term ascending trendline that had been acting as support since October of last year. The descending trendline aligns with the 200-day simple moving average, which the stock is now trading below. This indicates overall sentiment in the stock has turned bearish.

After Tilray lost the two major support zones, it fell to another support level at $13.41 and the stock has tested and closed above the level for the past six trading days. The level is important for Tilray to hold above because the stock hasn't closed below the level since Jan. 11.

Tilray is trading below the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day EMA, both of which are bearish indicators. The eight-day EMA is currently the closest resistance level above and on Monday Tilray attempted to regain the level as support but failed.

Bulls want to see Tilray jump up over the eight-day EMA and make a push toward a higher resistance level at $15.71. If the stock can regain the level as support, it could trade back above the ascending trendline which would give bulls much more confidence going forward.

Bears want to see Tilray continue to test, and therefore weaken, the key support level at $13.41. If Tilray’s stock was unable to hold the level, it could fall toward $11.87.

TLRY Price Action: Shares of Tilray were trading lower by 6.2% at $12.85.