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Weed stock Tilray (TLRY) has been sending investors on a ride.
Shares of Tilray fell 19.1% to $99.50 per share at market close Monday, marking the British Columbia-based medical marijuana company’s third day of declines. Some other members of the cannabis industry also saw their shares fall Monday, with shares of New Age Beverage (NBEV) down 35.6% and shares of Cronos Group (CRON) lower by 5.2%.
Shares of Tilray have been cut by more than two thirds since hitting a high of $300 per share last Wednesday afternoon. Tilray opened with shares higher by 50.7% on Sept. 19 after the company’s CEO, Brendan Kennedy, told CNBC’s Jim Cramer that investment in cannabis companies “is a global opportunity.” Earlier last Tuesday, Tilray gained approval from the U.S. Drug Enforcement Administration to import medical cannabis into the U.S. for testing purposes.
‘Is it a bubble? Absolutely’
Shares of Tilray continued to climb last Wednesday as traders scrambled to get in fast. The stock then began to collapse after shares were halted for trade five times within an hour. It finished Wednesday’s session up 38% at $214.06 per share — after seeing intraday gains of more than 90%.
Tilray’s intraday volatility last Wednesday produced some winners as well as some losers. Prominent investor Whitney Tilson predicted that individual investors would be hit the hardest amid the collapse in Tilray’s stock price.
“I’ve been short selling for 20 years … and I’ve seen this story so many times before,” Tilson said on Yahoo Finance’s Final Round. “It created good opportunities to make money on the short side. But it makes me sort of feel bad because I know who’s going to get incinerated here, and it’s the retail investors.”
Cramer echoed warnings for individual investors in response to Wednesday’s hectic day of trading.
“This whole group has gotten too hot – no argument here,” Cramer said on Thursday. “Is it a bubble? Absolutely.”
‘Cannabis stocks today feel like Bitcoin and Ethereum did in December’
While Tilray has pulled focus as the most valuable pot company, shares of marijuana industry peers Aurora Cannabis (ACBFF), Canopy Growth Corporation (CGC), and New Age Beverage have been similarly volatile.
The recent cannabis boom has prompted comparisons to the dot-com bubble of the late 1990s and ballooning prices of cryptocurrencies last year.
“The prices of the cannabis stocks today feel like Bitcoin and Ethereum did in December of last year,” said former hedge fund manager and emergent cryptocurrencies authority Mike Novogratz in an interview Thursday at Yahoo Finance’s All Markets Summit. “So if I was long on them I’d sell them. And if you’re a speculator, I’d short them.”