Tilray Inc TLRY's stock is up another 12.5 percent in the past week, but Citron Research’s Andrew Left said he's still short the stock and Canadian marijuana companies will not be the winners from a potential U.S. marijuana legalization.
At the Reuters Global Investment Outlook Summit on Monday, Left said leading Canadian marijuana companies would likely get steamrolled by larger American competitors in the event of U.S. legalization given that there is no brand value or competitive moat in the U.S. cannabis business.
“When U.S. LPs (companies) go public in the next few years it will make these Canadian companies laughable,” Left said.
Why It’s Important
Tilray shares are now up 339 percent in the past three months, and the U.S.-listed Canadian cannabis company isn't alone:
- ETF MANAGERS TR/TIERRA XP LATIN AME MJ is up 19.8 percent.
- Canopy Growth Corp CGC is up 35.4 percent.
- Cronos Group Inc CRON is up 37.5 percent.
- Aurora Cannabis Inc ACB is up 49.9 percent.
- Aphria Inc APHA is up 47.2 percent.
Canadian marijuana stocks have capitalized on investor enthusiasm following nationwide recreational cannabis legalization in Canada in October and state legalization measures approved by U.S. voters last week in Michigan and Missouri.
Left said he understands why investors are excited about the cannabis market but said Tilray is a dangerous way to play the trend. Right now, Left said Canopy Growth is the global market leader, although he has no position in the stock.
Left said the next potential bearish catalyst for Tilray will be its lockup expiration date on Jan. 15, 2019.
“What happens the day the lockup expires and the float doubles? What happens to the stock then?" Left said, according to Reuters.
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