The marijuana sector, beset by a host of tough challenges, has been out of favor with investors for years. That looks unlikely to change as long as the drug remains illegal at the federal level, and even that might not save some of the market's players. One of the cannabis companies trying mightily to succeed is Tilray Brands (TLRY -5.91%), which shed more than 26% of its value in April.

Fundamental declines and financial engineering

Those challenges are a constant drag. Meanwhile, Tilray has been attempting to cope with difficulties unique to it lately.

The company didn't start April on an up note. In the early part of the month, it published its fiscal third-quarter 2025 results, showing a 1% year-over-year decline in net revenue to just under $186 million. Worse, it posted a non-GAAP (adjusted) loss of $2.9 million after netting an $885,000 profit in the same period the previous year.

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That was a buzzkill on its own, but there was a more dispiriting development -- management reduced its guidance for net revenue. It now believes Tilray will take in $850 million to $900 million for the entirety of 2025, down notably from its previous modeling of $950 million to $1 billion.

Tilray entered penny stock territory quite some time ago, but throughout April, it was literally worth pennies. It traded well under $1 in the continuation of what's been a rather long slide.

One desperate remedy such low-priced companies reach for is a reverse stock split. This move boosts a stock's price at a stroke since the overall number of shares is reduced. It is a handy move for companies that might not be meeting the minimum share price requirement mandated by their exchanges.

Sure enough, the company has proposed a reverse stock split ranging from a ratio of 1-to-10 to 1-to-20 (yikes!). This will be voted on in a special shareholders' meeting on June 10.

Reaching for a brew

To its credit, Tilray has been gamely trying to diversify out of the marijuana business by buying a clutch of craft breweries. Beer is at least a product with mass appeal that isn't subject to the many headaches of the weed sector.

It's not the most profitable endeavor even at the best of times, though, and beer consumption has waned over the past few years. In fact, according to the trade group Brewers Association, it hit an over four-decade bottom in 2024. This doesn't feel like the business that will turn Tilray's fortunes around.

To be blunt, I don't currently see any catalyst on the horizon for this company. The only one that might move the needle is decriminalization in the U.S., but lawmakers don't seem to be in a rush to make that happen. I think Tilray is a stock to avoid these days.