Canopy Growth stock sold off ahead of the IPO of Tilray, Inc. (NASDAQ:TLRY) another Canadian cannabis supplier with growth aspirations. Tilray being public doesn't necessarily change Canopy Growth's earnings prospects, but it adds to the places investors can put their cannabis investment dollars.
I don't think it's a coincidence that the low point of the month for Canopy Growth was the day after Tilray's IPO. There was a rotation of investors out of Canopy Growth and into Tilray, which had the short-term impact of pushing shares lower.
Sometimes the mechanics of the stock market are more important to a stock's short-term performance than a company's actual earnings results. That's what I think we're seeing here in the dynamic between Tilray and Canopy Growth. There wasn't a fundamental change in Canopy Growth's business in July, but the stock's move is a reminder that the cannabis industry is small and volatile and something little -- like a competitor's IPO -- can affect the company's stock price.