Are Cannabis Stocks In A Bubble? Tilray Stock Investigated

Tilray has quickly become one of the most talked about stocks online. Tilray the Canadian cannabis producer became the first marijuana company to go public on the Nasdaq in July. Its initial share price: $17.

In a month Tilray’s stock has skyrocketed well past $200. The company is now worth more than $20 billion — more than American Airlines, Expedia, and pharmaceutical company Mylan.

So what gives?

Why Tilray’s Stock Price Soared

The US Drug Enforcement Administration just signed off on Tilray’s plan to import marijuana from Canada to the US for medical research and has been the catalyst for this growth and hype.

The facts of the deal are that the company will work with the University of California San Diego’s cannabis research center to study whether the drug can be effective in treating essential tremor, a neurological movement disorder. These were the results

“Tilray is the closest thing to being able to be [invested] in the cannabis industry in the most liquid market in the world, and that’s why we see the valuation where it is right now,” said Leslie Bocskor, president of Electrum Partners, an advisory services firm specializing in cannabis.

Should I invest In Tilray? NASDAQ: TLRY

No. I wouldnt. Just because it’s there, it doesn’t mean that investors would be wise to jump on the Tilray train now, most investores are probably around $200 too late at this stage.

Pot stocks are notoriously volatile, and there’s evidence a lot of investors are actually shorting Tilray’s stock. The main reason for the rise in price is actually down to the lack of supply to the market. Right now, there is a seriously limited amount of publicly traded Tilray shares available to investors, as 70 % of the company are still privately held by Privateer Holdings, a private equity firm backed by investor Peter Thiel.

In January 2019, private shareholders will be able to sell their shares to the public, meaning that a lot more shares could hit the market and push Tilray’s stock price lower.

But investing in cannabis remains precarious. Marijuana in the United States is still classified as a schedule 1 drug federally, on the same level as heroin and LSD. Under federal law, even legal marijuana is illegal. John Oliver explains why conflicting drug laws pose serious problems for the indusrty and in my opinion why Tilray’s rise to fame is nothing more than fomo, a fault to the suply and demand and greedy buyers.

This is a must watch video if you are at all interested in investing in Tilray or Pot Stocks.


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