How to Buy Tilray (TLRY) Stock

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Contributor, Benzinga
May 21, 2021

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Though positive catalysts have started to emerge over the last few months, nothing compared to the latest news that U.K.-based Grow Pharma, a leading unlicensed cannabis medicines supplier, will distribute Tilray’s good manufacturing practice (GMP)-certified medical cannabis products into the U.K. In one fell swoop on the Feb. 9 session, TLRY stock skyrocketed nearly 41%.

The announcement comes off other ambitious news for Tilray. In December 2020, Tilray executives announced that the company will merge with Aphria (NASDAQ: APHA) in an all-stock deal. Once the merger finalizes, it will form the world’s largest cannabis firm. Even before the U.K. distribution announcement, TLRY was already one of the top year-to-date performers in the market.

Before you add botanicals to your portfolio, you will want to familiarize yourself with the mechanics of how to buy stocks, especially cannabis securities, which have a reputation for wildness.

Merger with Aphria

  • Tilray shareholders approved a merger with Aphria at a special meeting on Friday April 30, 2021.
  • The combined company will be the world's largest cannabis company by revenue.
  • Aphria shareholders will receive 0.8381 shares of TLRY stock for every share of APHA stock owned.
  • The merger is expected to be finalized in the second quarter of 2021.

How to Buy TLRY Stock Summary:

  • Pick a brokerage.
  • Decide how many shares you want.
  • Choose your order type.
  • Execute your trade.

How to Buy Tilray Stock (TLRY)

Back in 2018, Canada became the first G7 nation to legalize adult-use recreational cannabis. A once-illegal market transitioned to a legal (and therefore taxable) one. You can’t get more transformative than converting a $0 market to a potentially multi-billion-dollar sector.

However, what was great news for the cannabis industry wasn’t exactly a bonanza for individual cannabis investments like TLRY stock. TLRY stock crashed sharply in late October 2018 and has continued to trend bearishly until late last year. While the narrative has undoubtedly shifted bullishly for Tilray, you’ll want to be careful in how you approach its shares.

  1. Pick a brokerage.

    You don’t need to be an investment expert to know that you need to pick a broker before buying TLRY stock. But determining the best brokers is a complicated topic because this isn't a one-size-fits-all concept.

    Typically, younger investors eschew complexity for convenience. Fortunately, there’s never been a better time to invest, no matter your demographic category. Thanks to rising competition, many online brokerages offer easy-to-access platforms with near-standard benefits like commission-free trading. Mobile trading apps like Robinhood allow on-the-go transactions, a key advantage for Millennial and Generation Z investors.

  2. Decide how many shares you want.

    If this is your first rodeo, you should know that the stock market conducts transactions based on share count and not dollar value. If you wish to purchase a certain dollar value of a particular stock, you must convert from dollars to shares.

    Fortunately, this is an easy process. Simply take the total amount you wish to spend and divide that by the market price of your target stock. For example, if you want to invest $1,000 in TLRY stock, you will be able to purchase 23 whole units ($1,000 / $42.35 = 23.61).

    Keep in mind that some brokerages will allow you to acquire fractional shares so that you may be able to receive the full value of shares for your spending amount. However, fractional ownership is not a standard feature so be sure to include this in your brokerage search criteria.

  3. Choose your order type.

    When you purchase a product at a grocery store, you expect to pay the listed price. However, in the market, the price almost always changes. Therefore, you must be aware of the nuances of stock transactions and terminology. Learn more about must-know concepts:

    Bid: The bid is the highest price an investor will pay for a stock and is always lower than the ask.

    Ask: In contrast, the ask is the minimum price a seller will accept and is always higher than the bid.

    Spread: This is the difference between the bid and ask price. As an investor, you are speculating that the price of your target stock will rise after your acquisition. In contrast, market makers make their money by the difference of their stock acquisition price and the price they sell that stock to you.

    Limit order: A limit order is a specific price in which you wish to buy or sell a stock. The transaction will only go through exactly at your pre-determined price, which is huge for transparency. However, there is no guarantee that the stock will reach that specified price.

    Market order: A market order is a request to buy or sell a stock at the next available price. If you place a market order inside normal session hours, it’s guaranteed to execute, delivering peace of mind. On the other hand, this is the least advantageous order type as your buy order will occur at the ask price (and your sell order on the bid price).

    Stop-loss order: A safety net for your portfolio, a stop-loss order exits you out of a position if a specified price is reached or breached. This way, you can avoid a catastrophic loss in case of extreme volatility. However, if the stock price gaps down between sessions, you may end up selling your holdings at a far lower price than desired.

    Stop-limit order: Similar to a stop-loss order, the key difference is that a stop-limit order will execute only at a specific price. Therefore, if a reaction rally occurs following a severe gap down, a stop-limit order will exit your position if the target stock reaches your price threshold. As with limit orders, there’s no guarantee that the stock will reach that threshold.

  4. Execute your trade. 

    Order types truly earn their keep when it comes to wild trades like TLRY stock. If shares happen to be flying a particular day and you absolutely desire to get in, the market order is your best friend as it guarantees you a position (albeit at an unfavorable rate).

    However, if you know which price is your maximum acceptable level, then the limit order is appropriate.

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Research which brokerage is most appropriate choice for you. While some brokers cater to quick-and-easy trading, others are far more complex, opening the full spectrum of investment vehicles.

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TLRY Stock History

At the dawn of cannabis legalization, Tilray stock appeared unstoppable, flying to an average price of $143.62 in September 2018. However, the bullishness quickly unraveled beginning in the following month. From there, TLRY printed what could only be described as a near-perfect bearish trend channel.

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TLRY stock may have hit bottom 2 years later, which would be an extraordinary coincidence. Certainly, momentum looks positive as shares have nearly jumped tenfold on a monthly average basis between September 2020 and early February 2021.

Pros to Buying TLRY Stock

Consider these pros to buying TLRY stock:

  • Legislative momentum: Not only does significant political power rest in the hands of the Biden administration, a robust cannabis industry in the U.S. will lead to something everyone can agree on — more jobs.
  • Growing international acceptance: While TLRY stock benefitted the most from the Grow Pharma deal, other cannabis stocks also jumped in sympathy. That’s because a U.K. partnership opens the door to wider international expansion.
  • A relative discount: At its peak, Tilray was nearly a $150 stock. While shares have soared recently, they’re still discounted from that peak valuation at $42.35.

Cons to Buying TLRY Stock

Heed the cons as well:

  • Poor history: Although TLRY stock is the toast of Wall Street today, it consistently failed to meet expectations for years. Expect volatility as prior stakeholders look to exit with something to show for their efforts.
  • Political tensions: Though the Biden administration is in the driver’s seat, the political landscape could change if Republicans rule the roost in a few years.
  • Lack of differentiating opportunities: Cannabis isn’t rocket science. Therefore, unless Tilray delivers something proprietary, it’s hard to imagine that competition won’t be a concern at some point.

Consider Profiting from a Rebound

For years, TLRY stock has been sidelined to the doldrums. But starting from the second half of 2020, sentiment picked up. Tilray made a key deal with Aphria and the Grow Pharma, which represents a landmark opportunity for the company and the broader cannabis industry.

However, TLRY stock doesn’t have the best historical performance. This may lead to volatility in the future as prior stakeholders look to break even.