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Tilray stock falls as lockup period expires; analysts remain bullish

By Brandon A. Dorfman
Jan 16, 2019

 

In a move expected by just about everyone, Tilray (NASDAQ:TLRY) shares plummeted 17 percent on Tuesday following the expiration of the post-IPO lockup period which kept insiders from selling their shares. The drop occurred despite the fact that Privateer Holdings, the private equity firm that holds over three-quarters of those shares announced last week that they wouldn’t be selling any during the first two quarters of 2019.

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Still, Tilray’s position may not be as dire as some think, at least according to some analysts on the Street. The company had been outperforming the overall markets throughout the early part of January, with stock prices reaching as high as $100 per share on the NASDAQ. Their rise mirrored that of the marijuana stock sector as a whole, which has seen a bit of a revival after a sharp pullback in late 2018.

Moreover, investors had been preparing for this day since Tilray’s IPO last year. Last week’s news that Privateer Holdings would be keeping 75 percent of shares off the market for another six months led to what analysts call a short-squeeze rally. When shares fell on Tuesday, they were still higher than from before the rally.

As of Wednesday morning, the company is currently trading at $83.62 per share.

Tilray signs agreement with Authentic Brands Group

Meanwhile, the company continues to make deals, having announced an agreement to develop and market consumer cannabis brands globally with Authentic Brands Group. According to MarketWatch, Tilray hopes to place its products in more mainstream retail outlets —both online and brick-and-mortar. Authentic Brands has partnerships with the likes of Walmart and Macy’s, something that could bode well for both Tilray and the industry at-large.

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According to reports, the deal is a revenue-sharing agreement, with Tilray’s products being sold through Authentic Brand’s distribution channels. Tilray will pay $33 million in cash and $66 million in stock, along with another $250 million in cash and stock to deal with changes to regulations both in the U.S. and globally, according to MarketWatch. In return, Tilray earns 49 percent of the revenue, with $10 million guaranteed every year for 10 years.

“We are extremely interested in our conversations with [Authentic] regarding the opportunity to distribute a portfolio of cannabis consumer products,” CEO Brendan Kennedy said in an interview with MarketWatch. “Brands are important to us and obviously to ABG. They have a massive global footprint.”

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