Back to top

Zacks Investment Ideas feature highlights: Tilray, Canopy and Cronos

Read MoreHide Full Article

For Immediate Release

Chicago, IL – January 17, 2018 – Today, Zacks Investment Ideas feature highlights Features: Tilray (TLRY - Free Report) , Canopy Growth (CGC - Free Report) and Cronos Group (CRON - Free Report) .

Tilray’s Slide Due to IPO Lockup Expiration

With a strong rally off of its December lows, Canadian Marijuana producer Tilray has significantly outperformed the broad markets lately, closing Monday at $100.15 – more than 50% higher than just a month ago.

Marijuana stocks in general are back in style after a meteoric rise during most of 2018, followed by big pullbacks at the end of the year.

Tuesday was a different story for TLRY however, with shares down 17% during a session when the equity markets were broadly higher.

Is there a problem?

In a word, no.

In fact, this move was actually expected, and paradoxically, many consider the decline a bullish development.

Tuesday’s selloff seems mostly to be the result of the expiration of the post IPO “lockup” period during which insiders were prohibited from selling their shares. As of the last filing period, roughly 76% of Tilray shares were held by private equity firm Privateer Holdings and an additional 11% were held by other insiders.

It’s common for shares of almost any company to decline somewhat when the lockup expires as insiders – who might include company employees as well as underwriters who took some compensation in the form of company shares – sell some of their holdings to lock in profits and/or pay taxes. Unlike other forms of insider selling, it doesn’t necessarily mean there’s anything wrong with the company.

Investors and traders knew the TLRY lockup was about to expire and had anticipated selling pressure on the shares, but then last Friday, Privateer announced that they had no plans to sell any shares during the first two quarters of 2019.     

The news led to a short-squeeze rally as the markets digested the reality that more than ¾ of outstanding shares would not be available for purchase for almost 6 months.  The shares traded up sharply, gaining nearly 20% on Friday alone and picking up 4% more on Monday.  As we headed into the expiration of the lockup on Tuesday, TLRY had rallied from $80.40/share at the close on Thursday to $100.15/share.

Tuesday’s selling action didn’t even take the stock down to the Thursday close. This would suggest that only a portion of the selling was the other (non-Privateer) insiders and was probably a combination of other longs and some new short sales.

The handful of Marijuana stocks available for trading on US exchanges – including Canopy Growth,Cronos Group,Aurora,Aphria and of course, Tilray – have been extremely volatile as the investing public sorts out financial information, positive and negative rumors, and the rapid pace of deal making happening in the industry.

Tilray’s wild ride the past few trading sessions is merely a symptom of the growing-pains induced volatility and nothing more.

Looking for Stocks with Skyrocketing Upside?Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>

Follow us on Twitter:  http://twitter.com/ZacksResearch

Join us on Facebook:  http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Tilray, Inc. (TLRY) - free report >>

Canopy Growth Corporation (CGC) - free report >>

Cronos Group Inc. (CRON) - free report >>

More from Zacks Press Releases

You May Like