Tilray (NASDAQ:TLRY), a marijuana grower based out of British Columbia, reported its second-quarter earnings after the bell yesterday. Though the company generated a meager $17.6 million in revenue during the first half of 2018, its market cap has soared to a towering $4.8 billion in only a matter of weeks.

Since going public in July, the company's shares have appreciated by a mind-boggling 130%. As a result, Tilray is now the third-largest marijuana company in the world after fellow Canadian growers Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED) and Aurora Cannabis Inc. (NASDAQ:ACB).

Two buds of marijuana laying on the side of a stack of U.S. currency.

Image source: Getty Images.

But the company's lightning-quick ascension to the top of this emerging industry does have some on Wall Street concerned. After all, there's a glaring disconnect between Tilray's underlying fundamentals and its current valuation, leaving some to openly wonder if this stock is now wildly overpriced. With this in mind, let's take a closer look to find out whether investors should stay the course or if it's time to take profits.

Tilray's stock is soaring for two reasons

Tilray's stock has been on fire over the past few weeks for two clear reasons. First off, Canada legalized the use of recreational marijuana for adults starting this October. While the value of the legal Canadian pot market is hard to nail down due to the presence of illicit growers that are likely to quietly steal market share, Wall Street's best guess suggests that legal cannabis sales could come in at a healthy $4.3 billion during the first year and grow to a stately $6.5 billion by 2020. As a result of this explosive growth, Tilray's revenue is projected to rise to around $500 million within the next three years.  

Second, marijuana stocks in general have been soaring in the wake of Constellation Brands (NYSE:STZ) buying a roughly $4 billion equity stake in Canopy Growth Corp earlier this year. Canopy's stock is up a monstrous 68% since its latest deal with Constellation last month, and Aurora's shares have benefited as well, climbing another 23% in the past month. The basic issue is that ailing beverage makers like Constellation are clearly looking for new avenues of growth, which could spur a flurry of similar deals across the marijuana space. Tilray has yet to sign a major deal of its own, but the chances are starting to look fairly good that a deep-pocketed partner will enter the picture soon.  

Is this marijuana stock too pricey?

From a fundamental perspective, Tilray's stock obviously isn't cheap. The company's shares, after all, are trading at a projected 2021 price-to-sales ratio of nearly 10 at the moment. That's the kind of valuation usually reserved for orphan-drug makers or cancer companies with some type of novel therapeutic. 

That being said, Constellation's equity deal with Canopy does appear to be a harbinger of things to come. Beverage makers and big tobacco are both likely to move further into this high-growth space within the next year, and Tilray is well-positioned to strike a lucrative partnership moving forward. As such, it might be worth hanging onto your shares, or perhaps buying some if you haven't yet.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.