Tilray is in trouble, this fund manager says

The chart for Tilray (Tilray Stock Quote, Chart NASDAQ:TLRY) is now one of legend, as the stock skyrocketed last September, effectively tripling its value overnight and hitting a high of $300.00, only to plummet back to Earth just as quickly.

And while cannabis mania is still a factor in the pot space where many names have posted huge gains during the first three months of 2019, the same can’t be said for Tilray: the stock has been on a steady decline over the past half-year, now dipping below $50.00 in Monday’s trading.

What’s likely to follow for the BC bud co? Probably more downside, says chief portfolio manager and founder at CastleMoore Investment Counselling Hap Sneddon.

“This whole area is a real quandary for me because there are so many variables. Tilray is such a new issue. It got to $300, but I see no support until we hit around $35 for Tilray,” Sneddon told BNN Bloomberg on Monday.

“I think you could see $34. We’re right around $48 but there’s nothing to hold it there anymore and I don’t see any catalysts in the sector,” he says.

Last month, Tilray reported fourth quarter results which included a consensus miss on earnings with a net loss of $31 million or $0.33 per share, larger than the expected $0.12 per share. Tilray’s Q4 revenue of $15.5 million beat the Street’s estimate of $14.2 million. (All figures in US dollars.)

So far in 2019, Tilray’s share price is down 30 per cent, including a loss of almost seven per cent on Monday, as cannabis stocks across the board took a hit. Sector leaders Canopy Growth and Aurora Cannabis were both down more than three percent, while the Horizons Marijuana Life Sciences ETF, which tracks the sector, was down more than four per cent.

Marijuana stocks took off last fall as Canada made preparations for the legalization of recreational marijuana, which began on October 17, but a significant drop-off occurred following that date. 2019 has been a different story, however, as HMMJ is up 36 per cent year-to-date.

Sneddon says the sector’s fortunes won’t be a major issue in the federal election coming up this fall, maintaining instead that voters are focused on other matters.

“The whole marijuana question, I think politicians don’t really care about this. I don’t think it’s a wedge issue or one that you win on or run on,” he says. “It is what it is and society has moved on.”