A full year after its widely publicized initial public offering, Tilray (NASDAQ:TLRY) shares experienced breathtaking highs and gut-wrenching lows. This dynamic attracted a fair share of skeptics and detractors. Even in an already volatile cannabis sector, Tilray stock is a big mover in both directions. Therefore, TLRY isn’t for the faint of heart.
If you’re seeking relative safety in the cannabis stock niche, you’re probably better off sticking with a cannabis old-timer: Speaking relatively, I’m referring to names such as Canopy Growth (NYSE:CGC) or Aurora Cannabis (NYSE:ACB).
But if you’re ready to take a walk on the wild side, though, then buckle up for some cannabis controversy. Compared to other weed plays, Tilray stock is a veritable roller-coaster ride.
Not Your Grandfather’s Stock
Millennials and younger traders are drawn to volatile stocks like TLRY; thus, don’t expect to see this in a lot of retirement accounts. With a jaw-dropping 52-week range of $20.10 to $300.00, it’s fair to say that Tilray stock experienced some growing pains before real price discovery finally took hold.
Plus, with no price-earnings ratio listed because the earnings are negative, this is a “proceed with caution” play. Still, the price action for TLRY seemed to have calmed down this summer. After generating considerable noise as the NASDAQ’s first listed pot stock, investors might identify a trading range for this wildcard.
No Lock-up Worries for TLRY
Much of the bearish sentiment surrounding TLRY involved the company’s largest shareholder, a private-equity firm known as Privateer Holdings. You may recall the hubbub over the ominous-sounding Tilray news that its insider shareholder lock-up period was ending earlier this year (Jan. 15, to be exact). That means that Privateer would now be allowed to sell all of its TLRY shares.
This most likely caused some investors to panic and sell their holdings of Tilray stock before Privateer could sell theirs. But as it turned out, their fears were unwarranted: Privateer announced that it wouldn’t sell any of its TLRY shares immediately after the lock-up period expiration.
That was quite a relief, as Privateer owned approximately 76% of Tilray’s outstanding shares. Not only that, they’ve agreed to extend their lock-up provision on those TLRY shares for two years.
For Tilray, gaining credibility on Wall Street wasn’t easy. But they managed to align themselves with a bona fide giant when they partnered with beer-maker Anheuser Busch Inbev (NYSE:BUD). The purpose of their joint endeavor is to research nonalcoholic beverages containing THC and CBD.
Personally, I feel that this partnership will prove transformative for the cannabis industry; investors and the media practically ignored this landmark arrangement, which is unfortunate. This deal will position Tilray in a unique position to capitalize on the potentially massive Canadian market for cannabis-infused beverages.
Another boost to Tilray’s credibility is the recent announcement that they’re importing medical cannabis oral solutions in large quantities to the U.K. Sascha Mielcarek, the managing director of Tilray Europe, noted that Tilray already has six medical cannabis products approved for medical use in the U.K. Mielcarek also expressed optimism as the company continues to make inroads into the burgeoning European cannabis market, stating:
Regulations are progressing as more and more countries across Europe are recognizing the benefits of medical cannabis and its potential to improve patients’ quality of life. We’re pleased to reaffirm our commitment to delivering medical cannabis to patients in the U.K. and look forward to offering a variety of GMP-certified, pharmaceutical-grade products in the coming months.
Skeptics should also be aware that Tilray already ships to 12 countries with legalized cannabis. Among them is Germany, which has a population more than twice the size of Canada’s.
The Bottom Line on Tilray Stock
Please don’t misunderstand — I’m not saying that retirees should load up their investment accounts with shares of TLRY stock. It’s something of an acquired taste.
However, cannabis-infused beverages and the rising cannabis market in Europe present huge opportunities. Therefore, I’m not at all against the idea of buying Tilray stock on the dip. It could turn into a joyride as the company strives for stability in this decidedly unstable industry.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
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