Shares of the Canadian pot grower Tilray (TLRY) gained as much as 13% on heavy volume Friday.
Given the lack of a discernible news event, Tilray's shares appear to be simply resuming their monstrous uptrend that's been ongoing pretty much ever since the company went public last July. Following this latest positive double-digit move, the company's shares are now up by an eye-popping 190% since its initial public offering only a few weeks ago.
Tilray and several of its closest peers have seen a tremendous uptick in their share prices this month, thanks to the reported interest by several alcoholic beverage-makers such as Diageo in forming strategic partnerships. The legal Canadian pot industry, after all, has already seen major deals struck between Molson Coors Brewing Co. and Hydropothecary Corp., as well as between Constellation Brands and Canopy Growth Corporation. So, with Tilray quickly becoming one of the top dogs in the industry following its uplisting to a major U.S. exchange, investors appear to be betting that this name will attract a deep-pocketed partner as well.
Having said that, investors should be aware that Tilray's stock is now profoundly disconnected from its near-term growth prospects. Put simply, this pot stock could be in for a sharp reversal if a deal doesn't happen soon. That's not to say that Tilray won't ultimately strike a deal with a major partner, but the market seems to be expecting a partnership offer to come sooner, rather than later. As a result, investors might want to tread lightly with this red-hot pot stock at these elevated levels.