Tilray stock has been underperforming the broader cannabis sector in 2019. Tilray Inc (NASDAQ:TLRY) has corrected almost 45% from its January peak price of $100. In fact, the stock is down 80% from its 52-week high of $300.
Sometimes high flying stocks can be derailed by lockup expiration because they present the first opportunity for locking in gains by insiders. Marijuana stocks at the beginning of this year were facing a lockup of a majority of their stock.
Here are some important updates about Tilray stock.
Privateer Announces Lockup
Voluntarily extending the lockup expiration helps in boosting investor confidence that company management is not after short-term gains and instead believes in the long-term strategy of the company.
In January, Tilray stock was one of the pot stocks that hugely suffered effects of the lockup expiration, with Tilray stock dropping 17% on the day of lockup expiration.
Tilray’s majority shareholder, Privateer Holdings, announced that it would voluntarily extend its lockup agreement holding until the second half of this year. Privateer Holdings holds over 80% of Tilray’s stock, which is around 75 million outstanding shares. The company indicated that it will not sell any share of its TLRY stock until around July, which demonstrates the confidence it has in the long-term strategy of Tilray.
Since going public, Tilray has given up most of its gains despite the stock initially listing at $17 per share and surging to around $300 in September.
Tilray’s Shift in Strategy
In the most recent quarterly report, Brendan Kennedy, the CEO of Tilray Inc, indicated that the company will now focus on expanding to Europe and the US with less emphasis on Canada. The company also pushed back its estimated return to profitability to 2021.
Tilray stock has a low float, which could result in its tradable stock ballooning suddenly in the event of a major shareholder deciding to lock in gains. This is expected to happen in the next two months and if it happens investors should be ready.
Featured image: Canva