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Why Tilray, Beyond Meat, and Pareteum Jumped Today

Dan Caplinger, The Motley Fool

The stock market moved higher on Monday, bolstered by good news on the trade front and hope for more favorable accommodation from the Federal Reserve. The White House chose to suspend expected tariffs on Mexico following a renewed agreement to pay greater attention to the flow of migrants northward from Central America, and substantial merger and acquisition activity also got investors excited. Some stocks saw extremely large gains. Tilray (NASDAQ: TLRY), Beyond Meat (NASDAQ: BYND), and Pareteum (NASDAQ: TEUM) were among the top performers. Here's why they did so well.

Tilray moves higher

Shares of Tilray climbed 11% after the Canadian cannabis company announced that it had come to agreement with its majority shareholder to gradually divest its stake. Privateer Holdings agreed to extend the lockup agreement and to "provide for the orderly release" of a 75 million block of shares, which represents a roughly 77% stake in the marijuana company. Over a two-year period, Privateer would be allowed to sell shares only under certain defined circumstances that would largely be at Tilray's discretion. A staggered release during the second year of the agreement will prevent a massive flood of shares coming onto the market all at the same time. Investors hope that this will take away an overhang that's held Tilray back compared to its peers during the first half of 2019.

Marijuana leaf on top of a pile of similar leaves.

Image source: Getty Images.

A short squeeze for Beyond Meat?

Beyond Meat saw its stock soar another 21%, adding to huge gains that've taken its share price to almost seven times its $25 offering price. A strong earnings report helped build even more interest in the plant-based meat-substitute manufacturer: Beyond Meat saw revenue more than triple in the first quarter of this year compared to year-earlier levels. Shares might well be skyrocketing because short interest for the stock is extremely high, with Yahoo! Finance saying almost 3.9 million of the 4.4 million currently available shares having been committed for short sales. That leaves the stock extremely vulnerable to short squeezes, and there's no telling how much higher the share price could go before gravity reasserts itself.

Pareteum gets an invitation

Finally, shares of Pareteum jumped 16%. The cloud communications platform company said that it would join the Russell 3000 index effective July 1. The move is a rite of passage for most small-cap stocks, and Pareteum will also gain entry to the popular Russell 2000 small-cap index as a result of the move. Pareteum has been under pressure lately as short-sellers have attacked the company's business operations, and some question the strength of its financial performance. Today's bounce reflects the fact that index investors will automatically find themselves with exposure to Pareteum come next month, and the company believes that it's doing everything it can to continue to generate the strong growth it's enjoyed.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.