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What happened
Actions of Tilray Inc. (NASDAQ: TLRY) were down 11.3% at 3:30 pm EDT Friday. This month, several major Canadian marijuana titles, including Tilray, have opened due to an article published by Politico according to which the employees of the company have not been able to use it. cannabis industry
But at the same time Canopy growth (NYSE: CGC) and Cronos Group (NASDAQ: CRON) – both listed on US stock exchanges – bounced back, the Tilray share price has fallen again. The most likely reason is that the stock of Tilray has exploded more than any other marijuana stock in recent weeks, the latest news giving some investors a reason to take profits.
Source of the image: Getty Images.
So what
The story of Politico certainly sounded scary for Tilray and the other Canadian marijuana titles. If investors thought they could not travel to the United States, they might be tempted to shift their money to other alternatives and avoid marijuana stocks.
It is true that the current immigration policy of the United States allows officials to block anyone involved in the cannabis industry or enjoy it from entering the United States. However, I think fears of major problems with the current regulations are exaggerated.
Investors appeared to agree with this view, considering that the shares of Canopy Growth and Cronos Group were in positive territory late Friday afternoon. Both companies would be as affected as Tilray by a widespread ban on immigration related to the cannabis industry.
But the decline of Tilray is not surprising. Before the decline today, the price had more than quadrupled in just one month. Many investors have probably felt that this important initiative may have been too fast.
Now what
Tilray will likely continue to experience significant price fluctuations – in both directions. The marijuana markets will certainly be very exciting, as the Canadian market for recreational cannabis will open next month. Big liquor companies and tobacco companies may be looking for cannabis partners, with Tilray possibly among the top candidates.
On the other hand, the assessment of Tilray is ridiculously high. Any bad news will probably waste a lot of time on his sails. I think investors can be optimistic about the long-term prospects of the global cannabis industry, but recognize when stock market valuations have moved ahead of that outlook. That's what we see with Tilray, in my opinion.
Keith Speights has no position on the mentioned actions. The Motley Fool has no position in the stocks mentioned. Motley Fool has a disclosure policy.
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