Tilray Inc. has been the most sensational stock of the past month. It has gone on an epic run, and is up over 300% since last month. Similar to what we did with CGC, we are going to discuss what the company does, discuss the technical analysis of it, where it’s headed next, and how you can trade it. Let’s start by discussing what the company does:
Tilray Inc. Overview
TLRY engages in the research, cultivation, processing, and distribution of medical cannabis. The company offers its products in Argentina, Chile, New Zealand, South Africa, and several European countries. Tilray, Inc. was incorporated in 2018 and is headquartered in Nanaimo, Canada. The company is a recent IPO, and started trading publicly on US exchanges on July 19th.
TLRY’s epic run started when they announced exceptional Q2 results, as the report indicated that revenues had almost doubled year over year. Tilray was recently chosen by Nova Scotia Liquor Corporationto be a supplier of the adult-use cannabis products it intends to begin selling next month, and just last week the company announced that Prince Edward Island Cannabis Management Corp. had also tapped Tilray for adult-use cannabis products.
Despite the exceptional Q2 results, the company is still losing money. The loss actually increased from 2.4$ million to to $12.8 million last quarter. It is widely considered to be extremely overbought at the current levels. It is currently trading at over $100 a share, having IPOed in the low 20’s:
TLRY has had an insane run the past month. Exactly a month ago it was trading in the high 20’s. TLRY closed Friday’s session at $109.05. It has not looked back since it broke out to all time highs on August 16th. TLRY had the perfect combination of factors for leading up to a monster run like it did. The fact that it was a recent IPO in the Cannabis industry made it a prime candidate for this kind of move.
Recent IPOs tend to make massive moves once they break out. Since there is so little chart history, there are no resistance levels to cause the stock to reverse. Once they break over their all time highs, these stocks usually see strong follow through on their breakouts. TLRY is quite overbought at the moment, and it will need some time to consolidate if it’s going to continue to trade higher this week.
TLRY can be a bit tricky to trade. It has a huge range, a low float, and not the best liquidity, especially compared to CGC and CRON. At times the spreads can get pretty nasty, meaning that there is a big price different between the bid and ask price on this stock. This means that you will often get slippage on your entries and exits because of the large spread. You can still catch some great moves, just be sure to give some extra wiggle room with your stop losses, and don’t trade this with too much size. Out of all the pot stocks we are going to talk about, TLRY is by far the most volatile, which means it is the best for day traders like me.
TLRY Trade Example
Above is a picture of the intraday chart of TLRY from last Thursday. I took an entry on TLRY on the break of that flag. Unfortunately I sold too soon in the $118’s, but was still a great trade. You can see how fast this thing can move once it gets going. For the upcoming week this could be a decent short if it breaks below it’s support level in the high 90’s. It is very overbought, and it has a lot of room to fall. If it holds up and starts to consolidate, we may see another move even higher this week. There are still a lot of eager buyers in the stock, as seen of how much it was bought up when it gapped down on Friday.
If you missed yesterday’s post on CGC, you can check out the article here.
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