If cannabis stock volatility wasn't enough, join the Reddit army. And they're targeting Tilray (NASDAQ:) (TSX:).
The Canada-based marijuana grower has been in the news lately, having completed a merger with Aphria (NASDAQ:) last month to create the world's largest cannabis company by . The newly combined company, trading as Tilray, has a market cap of $8.57 billion.
In the past year, Tilray shares have gained more than 135%, a much larger overall gain than any other marijuana company, such as Canopy Growth (NASDAQ:) (TSX:), which is up about 52% in the past 12 months and Cronos Group (NASDAQ:) (TSX:), whose share is up 37% in the past year.
But with the added attention of the legion of Reddit retail investors turning their attention to the pot stock, Tilray stock is making moves.
Is this a good thing?
That is of course a matter of perspective.
Tilray CEO Irwin Simon is pleased with the focus of Reddit followers. In an interview with CNBC last week, he said:
“I am very, very supportive. We love them. That group of Gen Z that trade our stocks today are technologically savvy. They are retail-savvy. They are brand aware. You want them as investors.”
Short sellers, on the other hand, are in a difficult situation. After shorting the stocks that have gained since the merger with Aphria, they are suddenly not in a comfortable position.
The stock is up about 10% since May 25, reaching a recent high of $22.50 last Wednesday. But it returned some of those recent gains, closing at $19.16 yesterday — a sign that short sellers may have taken back some ground.
But the attention focused on Tilray in recent trading sessions has not had the same effect as what the market has seen with other meme stocks.
First, the number of shares traded in recent days has been much lower than other meme stocks.
Shares of Tilray hit $64 in early February, but that was short-lived. That one-day blip was linked to the merger as investors tried to capture the spread between Tilray and Aphria shares.
But in this post-merger period, Tilray's focus from meme hunters could overshadow the fundamentals. The company now has a large share of the Canadian market, which is expected to grow to a CAD$8-$9 billion market. It now stands at approximately CAD$3.5 billion.
Taking over much of Aphria's range also gives it a good foothold in Europe and South America. Not to mention it's now perfectly poised to expand into the US once federal legalization gets the green light in the US market.
But keep an eye out for the meme action in the near future.
