What the Tilray Stock IPO Means for the Marijuana Industry

tilray ipo
iStock.com/eyegelb

Tilray Stock IPO

Perhaps the biggest news in the legal marijuana industry in July was the Tilray Inc (NASDAQ:TLRY) initial public offering (IPO).

What made the Tilray IPO so special, of course, was that it wasn’t just another marijuana company; it was the first U.S. marijuana IPO on the Nasdaq ever. And Tilray stock has been a huge beneficiary of being a “first.”

Canadian marijuana companies like Cronos Group Inc (NASDAQ:CRON) have had great success in the immediate aftermath of joining the Nasdaq, making the stock exchange an increasingly popular destination for marijuana stocks.

Of course, as more cannabis companies list on the Nasdaq, the novelty will wear off and we won’t see such massive climbs as what we saw with Tilray. There is, however, still a lot of potential for marijuana companies on that exchange.

Advertisement

Which brings us to what the Tilray IPO means for the marijuana industry.

First, you have a great investment opportunity, especially for those looking to make short-term gains.

TLRY stock, in its first seven days of being publicly traded, registered about 55% in gains. That’s a massive uptick that would make any investor’s head spin.

Of course, I’m not sure how sustainable those gains will be long-term, but it certainly speaks to a thirst for marijuana companies to go public on major U.S. stock exchanges.

The reasons for that are myriad, but the primary one is that U.S. retail investors are often unfamiliar with Canadian stock exchanges and prefer to trust American ones like the Nasdaq and the New York Stock Exchange (NYSE).

It’s about comfort, but also legality, since the laws surrounding marijuana stocks still remain murky, especially in the United States.

So, while investors may be a little too late for the Tilray stock gold rush (the company at one point hit nearly 80% in gains, only to fall about 30% in a day or so), any future marijuana IPO on the Nasdaq deserves careful consideration.

And that leads us to the topic of playing the marijuana game on a short-term basis, something I rarely write about.

My investment strategy is usually geared toward long-term investments, but, in the case of marijuana IPOs on the Nasdaq, the next few IPOs will likely spark excitement similar to that of Tilray.

While perhaps not as large a gain, these companies will likely see big jumps in the immediate aftermath of their IPOs. As such, day trading may be a way to score big when these companies eventually hit the Nasdaq.

While not the safest way to play the marijuana stock market, it is certainly one of the potentially more lucrative moves—if we’re talking about the fastest gains possible.

Analyst Take

While long-term I have questions about Tilray stock, you can’t argue with the company’s performance during its brief appearance on the Nasdaq.

As more cannabis companies join the stock exchange, expect to see other big marijuana IPOs make huge gains in short amounts of time.