Tilray’s share price plummeted today on the expiry of its IPO lock-up period. But is the sell-off investors exiting cannabis stocks? Or, is it as simple as Tilray “insiders” cashing in their profits?
Tilray’s stock lost 17.24% by the end of trading on the Nasdaq today, wiping out recent day’s gains.
With its IPO, Tilray began trading on the Nasdaq on July 19, 2018. Under US Securities and Exchange Commission (SEC) rules company “insiders” cannot sell their shares for a set period. For Tilray this was 180 days and that “lock-up” period expired today. Insiders, those who acquire shares before a company is publicly listed such as employees and venture funds, are now able to sell.
It looked like some of these investors abandoned the new cannabis company today, potentially inspiring a sell-off. However, Tilray shares have risen from a value of $20.10 in July 2018 to today’s end of $82.88. Investors could simply be cashing in.
In the post-market, Tilray shares are already up 1.83%, signs the stock could recover tomorrow.
There has been a flux of partnerships lately between cannabis and non-cannabis companies. The passing of the US Farm Bill opens up a legal market for cannabidiol (CBD) products which older and established brands are hoping to take advantage of.
Authentic Brands Group (ABG) could well be one of those, it has 100,000 points of sale and over 4,500 stores and outlets. The new revenue-sharing agreement is to market consumer cannabis products, where permitted, under the ABG brand. Under the deal :
“Tilray will initially pay to ABG US$100 million and up to US$250 million in cash and stock, subject to the achievement of certain commercial and/or regulatory milestones.”
In return, Tilray will take up to 49% of the net revenue from cannabis products under the ABG brand “with a guaranteed minimum payment of up to US$10 million annually.”
The timing of the announcement could well have served to off lay some of the effects of the IPO lock-up expiry.
Tilray’s competitors have seen mixed results today. Aurora Cannabis shares are up 0.22%. Canopy Growth is down 1.19%. Canopy, however, saw a major surge yesterday after being granted a license to produce and process hemp in New York.