A year after Tilray made history by becoming the first cannabis company to debut on a major U.S. stock exchange, one prominent value investor is doing a victory dance for nailing his call on a stock that’s taken investors on a wild ride.
Whitney Tilson was on Yahoo Finance’s The Final Round on September 19, 2018 when Tilray stock hit $300 per share. And while most of Wall Street was cheering the cannabis darling, Tilson was singing a different tune, predicting the stock would plunge by a whopping 90% within a year.
Ten months later, Tilray stock has given back a significant chunk of post-IPO gains — falling by roughly 85% since its 52-week high of $300 per share. Since its highly publicized IPO, shares have been extremely volatile with a stunning 52-week trading range of $21.50 to $300 per share. Currently about 30% of shares are floated.
Tilson returned to the Final Round on Monday with his latest view on the company as well as a cautionary tale on the marijuana sector as a whole.
“Whereas there is intrinsic value in the cannabis sector, you have got to look hard to find it because, like any frothy sector, there are just a lot of scammers and frauds out there,” Tilson said. “Tilray is actually a legitimate company, the stock just got way, way, way ahead of itself.”
The future of the cannabis sector
The cannabis sector has exploded in popularity in recent years, with some of the more bullish Wall Street banks calling for the industry to grow by as much as $166 billion in annual sales.
And while Tilson cautions investors about the sector in general, he admits there are some good bargains out there as long as investors do their homework.
“I'd caution investors in general about that sector, but I wouldn't say just don't look there at all,” Tilson said. “Some of the valuations have come down, and it's actually going to be a real growth sector. It's not like my view on cryptocurrencies, which is all just a total scam and there's no intrinsic value there.”
Iryna Kirby is a Producer for Yahoo Finance. Follow her on Twitter at @IrynaNesko.