Canada-based marijuana grower Tilray Inc. (NASDAQ: TLRY) added nearly 30% to its share price on Tuesday to close at $154.98, after posting a new post-IPO high of $155.10. In Wednesday’s premarket trading, Tilray soared another 40% to trade at more than $215 a share.
The company had sales of $9.7 million in the June quarter and a market cap of nearly $14.5 billion following Tuesday’s share price jump. Tilray’s quarterly loss came to nearly $11 million ($0.17 per share on a GAAP basis).
Tuesday’s big move was the result of the announced approval by the U.S. Drug Enforcement Agency (DEA) for Tilray to export cannabis to the United States for medical research purposes. A week earlier the company received approval to export medical cannabis flower to Germany. Tilray already had gained approval to export cannabis-derived oils to Germany.
Marijuana for legal recreational and adult use goes on sale next month in Canada, and that could drive Tilray sales higher. The company has struck deals with some Canadian firms to supply marijuana for use in recreational and adult-use products. But that hardly seems to justify the nosebleed share price levels.
But if you don’t believe that Tilray stock can continue to soar at this astronomical pace, it’ll cost you a stock-borrow fee of as much as 600% to place your short bet against the stock. According to a report at MarketWatch, short sellers have lost nearly $500 million so far betting against Tilray and a basket of other cannabis stocks.
The party in marijuana stocks began a month ago with the announcement that beverage giant Constellation Brands had invested $4.2 billion in Canopy Growth, another Canadian grow company. Other big beverage makers like Molson Coors and, more recently, Coca-Cola were reportedly looking for partners as they weighed creating marijuana-infused drinks.
Predicting the outcome of all this is not hard, but predicting the timing is virtually impossible. Is the run for Tilray and other cannabis-related firms a temporary flash (like, for example, bitcoin) or is this really the start of something that will endure? If the former, is there still time to join the party? And if the latter, is now the time to place a short bet?
Tilray shares traded up more than 19% at last look with a price of $185.10. The stock’s new post-IPO range is $20.10 to $236.00.