While Tilray Inc (NASDAQ: TLRY) has remained one of the bastions in the cannabis industry, the company’s strong reputation hasn’t prevented insiders from selling shares in the company as their initial IPO lockup period expired today. Overall, shares of Tilray plunged just over 17 percent as these shareholders, having been prevented from selling their shares for six months, finally had a chance to liquid some of their equity.
IPO lockups are a means of preventing insiders from selling their shares immediately after a company goes public. While this is good for creating a less volatile stock price for the company as it enters the public markets for the first time, it also means that many insiders itching to cash in their equity are waiting for the first opportunity to do so once the lockup period expires. The flood of stocks for sale creates a downward pressure on prices, which is what caused Tilray’s massive drop in share prices today.
Back on January 10th, stock prices surged 20 percent after the Peter Theil-backed Privateer Holdings – a company which owns 76 percent of all outstanding Tilray shares – announced they would be retaining all shares of the company instead of selling them when the lockup expired. This was a significant piece of good news for Tilray because the vote of confidence from the company’s largest shareholder undoubtedly helped prevent a more significant sell-off today.
“Privateer Holdings strongly believes in Tilray’s long-term global growth strategy and pioneering role in shaping the future of the legal cannabis industry. Given this, we do not have plans to register, sell or distribute the shares Privateer holds in Tilray during the first half of 2019” commented Managing Partner Michael Blue at the time.
While a big deal for short-term traders, the sell-off won’t have much of an impact for the company’s long-term future with fundamentals remaining solid. Tilray also announced today that it had come into a long-term agreement with Authentic Brands Group to help market their cannabis products. Tilray will pay USD $100 million initially to ABG in exchange for access to the latter’s global retail footprint of over 100,000 points of sale, 4,500 branded stores, and 250 million social media followers.
“We are thrilled to partner with ABG, a global leader known for expertly managing and marketing an owned portfolio of iconic brands,” said Tilray CEO Brendan Kennedy. “As we work to expand Tilray’s global presence, this agreement leverages our complementary strengths and will be accretive to our shareholders as we reach new consumers across the entertainment, fashion, beauty, home and health and wellness sectors.”
Regardless, Tilray shares will likely remain volatile for a few more days, with many more shares still remaining from insiders that could be sold in the short-term future or even later this year.
Tilray Inc Company Profile
Tilray is a global pioneer in the research, cultivation, production and distribution of medical cannabis and cannabinoids. Tilray was the first licensed producer of medical cannabis in the world to have its facility Good Manufacturing Practices (GMP) certified in accordance with European Medicine Agency (EMA) standards. The company currently serves tens of thousands of patients, physicians, pharmacies, governments, hospitals, and researchers in eight countries spanning four continents through its affiliated entities in Australia and New Zealand (Tilray Australia New Zealand Pty Ltd), Canada (Tilray Canada Ltd), Germany (Tilray Deutschland GmbH), and Portugal (Tilray Portugal Unipessoal Lda). –Tilray