Why Tilray Stock Just Stubbed Out

Canadian marijuana 'n' American alcohol stock Tilray (NASDAQ: TLRY) stock crashed 19.4% through 10:10 a.m. ET Friday after confirming it will proceed with its 1-for-10 reverse stock split.

On June 10, 2025, Tilray authorized Tilray to reverse-split its stock in a ratio of anywhere from 1-for-10 (merging 10 outstanding shares into one) to 1-for-20 (trading 20 old shares for one new one).

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Reverse stock split details

The "good" news today is that Tilray has opted for the less drastic option. The bad news is that investors will soon own 10% fewer Tilray shares than they thought they did. Tilray's share count will go from approximately 1.16 billion shares to 116 million shares.

The reverse split will go into effect after close of trading on Monday, Dec. 1. Tilray shares will resume trading at their post-split price on Tuesday, Dec. 2. With Tilray shares currently costing about $0.81 each, this implies the opening price Tuesday will be about $8.10 -- although further selling after the reverse split takes place could lower that number.

Which is probably exactly what sellers today are afraid will happen.

Is Tilray stock a sell?

To remind, just like an ordinary stock split, a reverse stock split doesn't change anything fundamental about a company's business. It just changes the price you must pay to own a share -- which, on the plus side, represents a greater proportion of ownership of the company than it did before the reverse split.

Indeed, raising the share price is the whole point of a reverse split, as it reduces the risk the stock will be delisted.

Still, a reverse split highlights the fact that Tilray hasn't been able to build a strong enough business to raise its share price naturally. That's probably a good reason to sell Tilray stock.

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