Cannabis Maker Tilray Soars 50% amid U.S. Regulatory Green Light
Medical cannabis maker Tilray (TLRY), which trades on the Nasdaq, has seen its stock expand by more than 50% today as the market cap races past $20 billion. As CNBC noted, Tilray dwarfs more than 100 companies in the S&P 500. Today’s gains are impressive, even for a stock that has gained about 900% since going public in July. Something to keep in mind is that on the fundamental side, Tilray only boasts $28 million in sales, suggesting that the stock has likely gotten ahead of itself. There’s reportedly been speculation about potential M&A involving Tilray and some rock-solid developments as well.
Meanwhile, the major indices are posting lackluster performances, which places the spotlight all the more on TLRY. Tilray has been buoyed by a couple of catalysts, not the least of which involves the regulatory green light to import cannabis into the lower 48 states for research. Additionally, Tilray chief Brendan Kennedy was featured on CNBC with Jim Cramer, which gave the company good exposure.
Kennedy in the “Mad Money” interview with Cramer pointed to a global medical marijuana market with the potential to be worth $150 billion despite all of the regulatory hurdles, one of which the company just cleared. It’s a market in which pharmaceutical giants need to play to remain competitive. Kennedy told Cramer:
“Cannabis is a substitute for prescription painkillers, prescription opioids, and so if you’re an investor in a pharmaceutical company or you’re a pharmaceutical company, you have to hedge the offset from cannabis substitution.”
Similarly, alcohol companies and investors need to jump in because “it’s a great hedge for them.”
In a paradigm shift, the U.S. Drug Enforcement Administration (DEA) has handed regulatory approval to Tilray to import medical cannabis to the United States for research purposes. Tilray has partnered with the UC San Diego to start. It’s a major boon for the Canadian marijuana play that already has a presence in the U.S., as now its North American positioning will only be strengthened.
Not to mention the fact that Coca-Cola announced it’s exploring an expansion into the cannabis industry, too. The beverage giant is in discussion with Aurora Cannabis for a possible marijuana drink. It’s created a frenzy in the cannabis market akin to the early excitement surrounding the blockchain.
Similar to crypto, there’s a great deal of speculation that’s driving Tilray shares right now, and as Cramer pointed out “a lot of retail money,” which may not end well for everyone. Until then, all eyes are on Oct. 17, which is when cannabis is legalized for recreational use in Canada.
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